the only 'damage' taken when vehicle option is on is bullet holes and scratches which are both 'decals' and not 'real' damage.
to see what i mean, turn the option on and use unlimited ammo/no reload/and rapid fire and shoot at cars and then at other things, eventually as you shoot more and more you will see the decals of the bullet holes go away. same for scratches, etc.
it's possible that some headlights will take damage as the developers for some reason chose to have a different damage function for those. go figure-