How density altitude affects power
An engine makes power from the mass of air it ingests. We work out actual air density from temperature, pressure and humidity (water vapour is lighter than dry air, so humid air is thinner), then express it two ways: as a density altitude — the height in a standard atmosphere with the same density — and as a fraction of sea-level density.
A naturally-aspirated engine's power tracks that density ratio almost directly, so ~3% less air ≈ ~3% less power. Forced-induction engines claw most of it back — the turbo or blower just works a little harder — which is why boosted cars are far less sensitive to a hot, high day.
FAQ
Does this apply to turbo cars?
Much less. A turbo targets a boost pressure, so it compensates for thinner air by spinning up more — until it runs out of compressor or the intake air gets too hot. The NA power figure here is the worst case; a healthy turbo setup loses only a little.
What's a "good" density altitude?
Lower is denser and better. A cold, high-pressure day near sea level can read a negative density altitude (better than standard). A hot, humid day at elevation can push density altitude to several thousand feet and noticeably blunt an NA car.