Controller Settings are too sensitive even at minimum

Just wanted to thank you for registering just to post this solution. It has completely changed my gameplay. I can finally floor the gas without the rear end rotating, no more understeer and oversteer and the input feels super smooth. I still play with the "extra wide" setting in steam though.
Your post should be a sticky topic for everyone playing with a gamepad.

 

I remember having this idea myself and trying this solution one or two years ago, but it didn't work. AMS2 still recognises the gamepad as a gamepad, even when you try to trick it into thinking it's an unsupported wheel. Consequently, the on-off digital behaviour that plagues gamepads in this game persists.
The fact that this trick requires speed sensitivity to be set to 95 proves my point. It's an extremely high value which only works in AMS2; with anything less, you would have no control over your car with a gamepad.
I think it's just a placebo effect, but I'll give it another try.

 

That's odd, with the settings the op is using controls should feel very slow and unresponsive.

I've always felt like controls in AMS2 aren't sensitive enough, it feels like there's a bit of input lag, the in-game steering wheel doesn't move as fast as I want. AMS1 feels more responsive with gamepad.

In my case I set up my Xbox 360 controller as custom wheel, separate pedals, calibrate the pedals (I use triggers for gas/brake), calibrate steering, set steering lock at 300, all deadzones and controller damping at 0, all sensitivities at 50, but even with those settings it feels like there's some sort of built-in filter that slow down my inputs and makes quick small corrections difficult to perform. It's playable but not as good as AMS1.

 

I set speed sensitivity to 25 and steer sensitivity to 100 and it works great. Damping 0, ultra wide preset.