The townsfolk are having a village car race and they invited most of the car owners in the village, which means that you need to participate too. Your car may not be as fancy as the others, it is one good sport that you can't pass on. Besides, you would need the money as you can use it on your homestead. It might not be too much, but that would certainly help. Also, participating in such contest is a great way to gain new friends, when you are new in the area. You just move on to the countryside and you don't know everyone in the area, so this car race would be a great idea as you are going to meet most of the townsfolk there.
Participate in the car race and bring home the honey, at least, that is what the race is all about. But, since this is a game, you need to focus more on not just winning the race, but also to be a competitive racer. You can buy some upgrades and better car as you win some money. Now, you know, where you can get the money in this game, it is time to race.