It's Forza Motorsport 4's official E3 party, and between a coterie of automotive exotica - a Gumpert Apollo rubs shoulders with an Aston Martin LMP1, while a Koenigsegg CCX sits shyly in the corner - Rampage Jackson is grinding to a set by Mixmaster Mike.

Just under 36 hours beforehand, Turn 10's Dan Greenawalt took his place at the frontline of Microsoft's Kinect assault at its E3 conference. Forza Motorsport 4, we were told, will transform the racing genre, and a well-choreographed trailer boasted cars modelled with unprecedented detail that can be explored through the power of the motion controller.

Through all this hype and noise, it's difficult to figure out what there is to really get excited about in Forza 4 - and beyond some shallow cries (more graphics! motion control!) it's just as hard trying to decipher what meaningful changes have been made to Turn 10's formula.

Stepping up to actually play the game, it's also easy to be a little complacent. Forza's handling has veered from the dry simulation of the second game to the more pliable cars of 3, but the one constant has been its forgiving nature. Within seconds it's clear that Forza has changed dramatically.

Switch off all the assists and engage Forza 4's all-new simulation handling mode and it's a strange and quite terrifying experience, a single lap of the fictional Alpine circuit seeing a Ferrari 599 spitting us into the scenery at every opportunity. The front engine, rear-wheel drive car lazily lunges into corners with heavy understeer before, just as it kisses the apex, snapping into aggressive oversteer that sends the rear flailing. After the relative stability of Forza 3's cars, it's a shock to find these cars so alive and so wild.

Turn 10's John Knowles smiles as we recount this experience to him later, going on to explain how the more involved handling has come about through the expansion of the existing partnership with tyre manufacturer Pirelli. "We've taken all their physical data and all their tyre deformation data and we've matched it against everything that we were doing," he says.

"We've learned what we were doing right, and learned what we could have been doing better, and then we pulled the trigger - and it was scary because everything's changed. The effects were immediate. The cars that are more prone to oversteer will be more prone to oversteer, and the cars that are prone to understeer will plough harder."

Playing to the handling's newfound dynamism is a fresh pass on the game's camera that takes some cues from Slightly Mad Studio's two Need for Speed: Shift games. In-car, the leather and plastic of cockpits is more defined, the field of view has been expanded and the pitch and yaw of the car is now more dramatically conveyed in the camera's movements.

It stops some way short of Shift's melodramatic sense of speed, but it does enough to provide a new layer of visual feedback as well as enlivening the ride and skimming off some of the series' starch. "We don't want to go all arcade, but Forza has always been, to be frank, pretty sterile," acknowledges Knowles. "We're taking the gloves off a little bit and we're letting the cars speak a little louder."

They're louder in a quite literal sense too. A new audio pass sees the Ferraris emit the throaty blasts that they should, while the purr of a muscle car has a satisfying bass. Even a road-spec Subaru Impreza belies its rally heritage with the bark it makes when you stab at the loud pedal.

Forza 4's debt to the Shift games doesn't go uncredited, and its renewed sense of speed isn't the only feature borrowed from EA's long-running Need for Speed series. Rivals Mode heads up a reinforced online offering that's also introducing dedicated car clubs, and it promises the kind of asynchronous online play that, for anyone who's been ensnared by Autolog, sounds strikingly familiar. Like Autolog (although as Turn 10 rightly points out, Criterion didn't exactly invent the idea of online leaderboards) it'll sit across the career and constantly feed into the player experience.

For its familiarity, it's a welcome sign that Turn 10 isn't operating in a bubble - the sort of bubble that ensured that, for all of its achievements, Polyphony's Gran Turismo 5 felt antiquated at times. Forza 4's improvements and flourishes give the cars a character that was previously lacking, and elsewhere there's been a further injection of personality, even if it isn't entirely Turn 10's own.

The Top Gear track, used so gingerly in Gran Turismo 5, is here just one offshoot of Turn 10's collaboration with the TV series. First - and perhaps most importantly for fans of the series - there's the inclusion of the Kia Cee'd, Top Gear's own 'reasonably priced car'.

Then there's the presence of Clarkson, Hammond and May, all three of whom provide detailed narrations of the cars themselves. Sitting alongside the clipped tones of the returning Peter Egan (Peter Egan!) they're an incongruous addition, though their obnoxious TV selves have been reined in and neutered to smooth the fit.

Elsewhere, the fit requires a little less manipulation. Challenges set by the Top Gear crew will feed into a revised career mode, which is now dubbed World Tour Mode, though quite what they'll be and how they'll be filtered remains unclear. As too does much of the World Tour's content, although the dry calendar-based front-end of Forza 3 has been replaced by something a little more dynamic and a little more colourful.

It's that little bit prettier too. Forza 3 tended towards the functional end of handsome, its visuals sturdy if a little flat and its cars faithful if uninspiring. Autovista, Forza 4's new gallery mode that debuted at last year's E3, now fetishizes them with the same fervour displayed by Polyphony, the cars now described with exacting detail.

They're also told in interactive detail, with doors sliding open and slamming with a hearty clunk, Kinect enabling players to stroll around the cars and examine their every nook and cranny while that Top Gear narration plays out. "Every car should be like a level in a platform game," enthuses Turn 10's Dan Greenawalt, "where round every corner there's something for you to explore or interact with."

It's a cute feature, for sure, but it's not quite strong enough to support the weight being placed on it in these early presentations. Its true purpose, it seems, is in highlighting the heightened visual fidelity of Forza 4. Turn 10 have striven for what they call the sub-6-inch detail, which translates as the finer details of a car – be that the plastic honeycomb of a tail light or the metal weave of a brake disc.

The level of detail attained for Autovista mode carries over to the track, and here Image Based Lighting - a technique borrowed from Hollywood – seats the cars naturally in their environments, the sun dancing off their bodywork in believable ways. It's likely that the cars will be party to differing light conditions too; an early pass at Suzuka shows it at both noon and early evening, and Turn 10's coyness when it comes to addressing questions about whether we'll see that sun fully set is a sure sign that night-driving will play a part in the final code.

Alongside the Top Gear licence, it could well be another feature that flies close to Forza 4's natural rival, Gran Turismo 5. It'll unlikely be the last either, and with its Kinect-enabled head tracking, it's fascinating seeing these two entities - and the peripherals that support them - going toe-to-toe. Forza 4 takes this particular round, with the head tracking proving swifter and more responsive than the disappointingly digital movement of Gran Turismo 5 - but it's still a little way off from being reliable or, for that matter, much fun to use.

And with all the fuss and focus on Kinect, it's another, more modest motion controller that steals the show. The newly announced Wireless Speed Wheel, ungainly as it may look, provides a surprisingly engaging ride, its long triggers providing accurate control of throttle and brake and its solid build making it neither too wearisome to hold or too light in the hand. For those without the room and inclination for a proper steering wheel, it's perfectly adequate.

Pedestrian as it may seem from the outside, Forza 4 represents a comprehensive shake-up for a series that's reached a turning point. With Gran Turismo having its momentum sapped - critically, at least - Turn 10 has moved out of that particular shadow. With the focus now seemingly no longer on its rival racer, Forza's attention has turned to itself, and the result looks to be a better, smarter game that's less sterile and much more alive. Surely that's something worth getting excited about.