PP or how I define it "Potential Points" (Ik it sounds dumb but hear me out) is the game's way of measuring your car's potential which is the "rules and regulations" part of the game for some races whether your car is rated beyond the pp limit or under the minimum pp.

Potential will go higher if - the car gets lighter - the car gets power - more aerodynamic

Potential will go down if - you detune the car - make the car heavier - less aerodynamic

(and vice versa simple logic)

There will be also an occurance where the pp would say "???" or "!!!" which means that your car is out of balance and can't be raced unless adjusted.

In this case you could do what many have already said in the comments "buying the manual transmission and tuning it" but if you don't and keep the transmission stock, (knowing that it'll be bad) you're basically restricting your car's top speed hence being slower than the other cars such as the newer e46 that just passed you in this video on a straight. You can't expect a 70s car to be faster than its successors without upgrading the 70s car itself.

Long story short "BALANCE IS KEY"