This is a pretty cool prototype! I took notes while I was playing:
For the vehicle selection / upgrade menu I'd have it so each category (engine, exhaust, etc) has their own image icon and also a different color/highlighter effect to show which one is being selected.
I think the cars have a nice cute style to them, I wish i could at least change their colors a bit, you could even have unlockable color schemes or new teams you can play as with unique liveries.
I noticed you can't go back to a previous car you have to simply keep going forward until it loops.
I'd prefer the car starts facing towards the camera instead of away when it starts it's rotation on the selection menu. '
For my first race, there were 3 purple muscle cars and I picked one too so I wasn't sure which one was mine without any sort of indicator. I also noticed the racers crash into walls on tight turns easily (this is something I struggle with on my own racing game's AI so I totally get it!
The camera doesn't look ahead when racing, so what happens is if your car is going south for example you won't be able to see up ahead, making it harder to make decisions if there's someone else on the road for things like using Turbo. I ended up ramming into someone behind and losing my momentum because I couldn't see who was in first place.
For my 2nd race my car was upgraded with a new exhaust, maxed out engine and My theory is that the AI isn't looking far ahead enough on straights and slight turns so it constantly thinks it needs to make a hard turn and brake. The first race didn't have this much of issues only on the tight turns.
What might help is a bit more interaction with each race. I did see the option for different driving modes like defensive and aggressive but as far as I could tell it didn't really do anything.
One idea was you could maybe use abilities to boost your own car or mess with other drivers, setting down traps and hazards, or even disable other's abilities for a short bit, you could get really creative with it. I imagine you could save up money for new ones or upgrade current ones. Maybe you can hold up to 3 and upgrade to hold more, or upgrade how powerful your abilities are.
I'd admit this would be pretty "off-brand" if you wanted to stick with it being a track-focused racer with no goofs but it could totally transform the game experience if you're willing to work with a shake up to the game's theming/identity.
Music is of course something you can look into. You can pick anything really! I dunno what kind of music you're into but some stuff you could try is seeing if you can get some "flash-era" style music like 2008-2012 trance or happy hardcore since your game has that "internet game I'd play in 8th grade during lunch break" vibe (yes this is a compliment, haha). You can also put in whatever you like to be fair I'd just like to hear some tunes! (let me know if you want some examples I can send some your way lol)
I think Tiny Wheels could be a pretty cool little game, I think it just needs a few things to help shake up the gameplay loop, adding more variety and player interactivity, plus improvements for things like the AI driving logic. Nice work!!