Increased displacement involves using a milling machine to improve the cc rating of a car. By effectively boring out the cylinders, you can increase for aexample a 2600 cc godzilla skyline to 3200cc.

This is an expensive exercise but increases power, and more noticeably torque in the car. I know this becasue modified Japanese cars are 10 a penny here in NZ, and you often see 2500 cc turbo skylines bored out to 3200 cc for more grunt and torque.

Not all engines will allow it, I know in GT1 the only car you can do this to is the nissan skyline.