You'll need to upgrade throughout the game, but don't go overboard. As a general rule, it's a waste to upgrade anything all the way to level 4 until you have the Havac, since the cost is too high when you still have to buy another vehicle later. You also might not want to upgrade your Dirt Devil or Marauder at all.
Remember that you only need to upgrade when you need it for the points to win the races. Buying an upgrade in the hopes that you will recoup your costs through your victories is not very economical. For example, if you buy two missile upgrades, those two upgrades will need to win you four races that you would have otherwise lost entirely to break even. That's not going to work. What this means is, if you are reasonably confident you can complete the current division without upgrades, and you will need to but a new car on the next planet, don't upgrade your car. Save your money for the next car you have to buy, and use the surplus to upgrade that! You can often even start saving up early in Division B, because if you can crush Division B you can probably win Division A.
Once you have the Havac there is no longer any need to save money so you should buy all the upgrades available for it.
When you race, you will see under the lap number a meter using small colored spheres. This meter is your car's structural health: when it gets red and near empty, your car starts smoking and one or two hits may well do you in. When you buy a new car, you only get three spheres in your meter; each body upgrade gives you one more sphere, so that you can take more damage before exploding.
Available upgrades: Defender (default), Rhino Skin ($24,000), Saber Tooth ($48,000), Atlas Powerplate ($64,000).
Tip: Your enemies upgrade their Body if you do. If you want them to stay easy to kill, don't upgrade your body until you face Havac opponents, since their weapons won't ever miss their targets.
Your engine controls your acceleration and top speed. However, engine upgrades are the most expensive. For the price of a level 2 engine, you can buy an Air Blade -- definitely recommended instead if you don't have it yet. But once you have at least an Air Blade, it's certainly worth it to upgrade your engine at least a little... it can mean the difference between placing first or fourth!
Available upgrades: Cobra Mark VII (default), War Hammer ($40,000), Super Charger ($70,000), Atlas Power Boss ($110,000).
Shock absorbers streamline jumping, as your landing impacts will be smoother. They're not that necessary, though you may want an upgrade for bumpy courses, and they're a complete waste on somebody who has jumping skill. The need for shocks disappears completely with the Havac (it has no shocks so cannot have this upgrade).
Available upgrades: Grasshoppers (default), Hydrosprings ($20,000), Hydro Twinpacks ($40,000), Atlas Power Lifts ($60,000).
You can only buy tires relatively early in the game, before you get the Battle Trak (which treads) or the Havac (which hovers). This will only be necessary when you have a character with no cornering skill.
Available upgrades: Track Masters (default), Road Warriors ($30,000), Super Mudwhumpers ($50,000), Atlas Power Claws ($70,000)
Each car has its own kind of armaments. See the Cars page to see how well they work.
Available armaments (depending on the car):
- VK Plasma Rifles: $14,000
- Locust Jump Jets: $6,000
- BF's Slipsauce: $20,000
- Rogue Missiles: $20,000
- Lightning Nitros: $24,000
- Bear Claw Mines: $20,000
- KO Scatterpacks: $24,000
- Sundog Beams: $20,000
Every purchase adds one extra unit of ammunition to that armament, and you can buy up six (counting the one unit you start with, that's a total of seven). Armament upgrades only add ammunition, they do not improve the damage or functionality of the weapon itself.