Can you modify cars on forza 3

You can TOTALLY modify and upgrade cars on Forza 3. -- Every car will have its limits on what you can and can't upgrade. Here is a list of things that are available for modification on most cars:
Engine and Power: Air Filter, Intake Maniflod and Throttle Body, Fuel System, Ignition, Exhaust, Camshaft, Valves, Displacement, Pistons and Compression, Oil and Cooling, and the Flywheel.

Platform and Handling: Brakes, Springs and Dampers, Front Anti-roll Bars, Rear Anti-roll bars, Chassis Reinforcement and Roll Cage, and Weight Reduction

Drivetrain: Clutch, Transmission, Driveline, and Differential

Tires and Rims: Tire Compound, Front Tire Width, Rear Tire Width, Front Rim Size, Rear Rim Size, Rim Style.

Aero and Appearance: Front Bumper, Rear Wing, Rear Bumper, Side Skirts, Hood,

Conversion: Engine Swap, Drivetrain Swap, Aspiration Conversion

You can also fine tune your vehicle after you've made your race machine as fast as it can go. Fine tuning doesn't cost any money, you just have to know what you're doing. I never mess with this setting myself... Things available for tuning are...

Tires: Front Tire Pressure, Rear Tire Pressure.

Gearing: final drive, 1st, 2nd, 3rd, 4th, 5th, and 6th gear. (Also 7th if the particular car has it)

Alignment: Camber; front and rear, Toe; Front and rear, Front Caster; angle

Anti-roll Bars: Stiffness; front and rear

Springs: Stiffness; front and rear, Ride Height; low or high

Damping: Rebound Stiffness; front or rear, Bump Stiffness; front or rear

Aero: Downforce; front and rear

Braking: Braking Force; balance, Braking Force; Pressure

Differential: Front and rear acceleration and deceleration, Center torque

Hope this isn't overkill.