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According to the game manual website, the game is running on Unreal Engine:

https://manual.sega.jp/sonicracingcrossworlds/cnt/asia_en/index.html

Prior Sonic Racing games ran on an in-house engine of Sumo's.

It's also apparently being worked on by the devs of Initial D:

https://sonic-city.net/2025/02/14/initial-d-developers-confirmed-to-be-involved-in-sonic-racing-crossworlds/