"Mechanical Failure" is probably a catch all for several problems that might arise during a race, like suspension damage, engine failure etc. I have blown quite a number of engines in accidents, but I have never blown a transmission or rear axle/live axle. I know that looking at the information in motecadd you can see that the engine does take damage during a race, and if you aren't going crazy on your down/up shifts it won't affect your racing.