The word "homologation" itself means to approve or clarify. It is used in both racing and in other official competitions like the Olympics. Race cars and vehicles—even for non-motorsports events like the luge—have to be homologated to a certain set of rules so they can be deemed fit for use in competition. You probably have heard the term "homologation special" before, and it most often applies to road cars that have direct racecar counterparts, because they were built to fulfill production-car requirements for a given sanctioning body.

Why have homologation rules demanding racecars have salable counterparts? Though a number of racing series had homologation rules, we're going to use Group A racing regulations to illustrate the point. Group A was a special race series introduced by the Fédération Internationale de l'Automobile (FIA) in which "production derived" vehicles would race in touring car racing or rallying. Up to 1991, automakers had to build 5,000 roadgoing versions of the racecars they wanted to enter into competition in order to qualify. After 1991, the number was brought down to 2,500.

Essentially, the FIA didn't want automakers building purpose built supercars for Group A (as well as a number of other racing series). Instead, it wanted modified versions of normal street cars to compete, so to ensure those street cars actually, you know, existed, it leaned on homologation rules. Not only did a would-be racecar have to meet minimum production requirements, various specifications such as engine displacement, chassis dimensions, and suspension designs typically had to be similar between the road car and the racecar. A Group A series known as the German Touring Car Championship (DTM) gave us cars like the Mercedes Benz 190E 2.3 Evolution and the original BMW M3 (E30).

Another classic example of these rules making a huge impact on a road car is the Subaru Impreza WRX. Subaru wanted to enter into the world of rallying in the early 1990s, but needed to homologate one of their cars to do so. The base Impreza was a normal family car in Subaru's lineup that was introduced in 1992. The World Rally eXperimental—or WRX—version would be the car that both helped establish Subaru's reputation as a performance brand and dominated rallying at the time.

The BMW M3 and WRX aren't homologation cars anymore, and most homologation rules were loosened in the 1990s to make it easier for manufacturers to compete. That doesn't mean such homologation specials don't exist anymore, however. The upcoming GR Yaris from Toyota is a true, rally-inspired special with a bespoke chassis and engine that both feature in the Yaris rally car.