Tap the brakes directly at the moment of impact. This will execute a perfect guard, preventing your car from taking damage and staggering the other car so you have an opportunity to counterattack
- he/him
Chicago Game Developer
Project lead, programmer, & composer at @CantGetEnoughGames (http://cantgetenoughgames.com)
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in reply to @Sol's post:
Adds racing game with parry mechanics to my list of games to develop
Note that this is easier in Europe, as cars run at 50 fps in PAL regions
Thanks to cohost’s unusually high SEO rankings I’m looking forward to seeing this in a Google search result for driving safety tips
“I swear that’s what the advice Google gave me was! Also did you know piss is a vegetable?”
All this time I've been doing armor bursts and trashing my car's panels. 
people say the time window is unfair but the red brake lights telegraph the attack from a mile away
That's only in K-Groove. In P-Groove you have to release the accelerator and tap it again at impact.
If you are using Valor Style, you activate the E-brake and keep it held down as you get hit. Your vehicle will automatically swerve at the cost of some fuel.