In custom races the time of day does not rotate properly. It’ll change for about 4 to 5 minutes then stop. If you are doing an endurance race you will not notice the time rotating after said time frame. The only way to make the time fully rotate is to set the time of day to freeroam. If you do that outside the current season it will always start at morning.
This wasn’t an issue in Forza Horizon 4, so I don’t know why it’s broken on this game.
I’ve searched these forums and haven’t seen anyone mention this problem. Either people don’t notice because short races, or not really focused on it.