The car dealer is partially about the close racing, partially about giving everyone a chance to lead here and there. To "mix it up". To be consistently at the back is very tyring, and there's usually quite a few people around who cannot put many hours into practice each week.
The car dealer can give them a boost of fun.
Btw; talking about close racing; I don't think you can achieve that for everyone in any way in a small field (not with the same car that's for sure). The difference in skill means there'll be groups.
The car dealer mixes the field up.
Now, of course each track is different, one car maybe more advantageous at one track compared to the other.
But the cars need to be fairly close in performance; eg if you have an alien, who can lap 2-3s faster, they need a 2-3s/lap slower car to even it out. So as you can see, the selection of cars would have to be dependent on the field of participants as well, to some extent. (although if you have to buy the cars weekly, and not keep it, I think it balances things out pretty darn quickly, and to a good extent)
But it can work. It has worked in GTL and we only had a handful of cars to play with
I think the one thing to aim for is that the biggest difference in car performance should be just over the greatest laptime difference between Alien Joe and Turtle Harry.