I traveled most of the Panamerica by public bus in 2008-2010. A normal car should be sufficient for the main road even though south of Mexico is is usually a 2-lane affair and can be pretty windy in the mountains and you can’t go too fast. However you may want to leave the Panamerica for some side trips and the smaller roads are often not in the best condition. But normal cars are used by the locals everywhere.
I have driven portions of this through Mexico, and a normal car is perfectly fine. Most of it is 4-lane, divided highway, very similar to U.S. Interstate highways–only with more toll booths, and occasional cross-streets (mostly around major cities). Once you get south of Mexico, I cannot comment on the quality of the road.
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