It’s certainly simpler than Forza et al, but there’s an open-source racing simulator, called Speed Dreams: www.speed-dreams.net
If you watch the “Latest Release” video, there’s some engine sounds in that.
They also do that for gear changes, tyre sounds, collisions and backfires.
From what I know about audio, I would expect AAA games to still use the same approach of recordings+modulations.
While it is possible to fully synthesize an engine sound, it doesn’t help you much with making it sound right in all different situations.