Well i haven't really taken much notice when i drive it around, but i think it does the following:
- Turns red when you hit a wall/car etc...
- Turns blue when you go off track
- Turns yellow when you go into the Pits
- Turns some other colour when you win a race? And get close to the other cars?
The P.O.Ds lights are to do with it's emotions, Red angary, Blue sad, Yellow happy. They talked about the real version on men and motors on Sky, it was acctually quite good.