I've really enjoyed this demo!
In my opinion, the retro artstyle is the strongest point of Your game right now - "Rally game with PS1-like graphics? I must check it out!". Visuals make this game memorable.
Also, as a fan of rally games (expecially Colin McRae Rally series), I've felt satisfaction after completing the stage, despite the fact, that some elements of handling model felt off, ex. grass on the last U-turn feels like ice (so I fell down from hill on my 1st run) and the car doesn't want to powerslide (it looks like 4wd? idk).
Overall, this little demo has made my day and I hope to see a full game some day! I see a lot of love and effort put into this project, especially considering You have decided to use custom game engine. Good luck!