The horsepower can go all the way down to 0.
For extreme BHP values (e.g. >1000 or <500) you might also want to change the CC car setup. In particular the gear ratios, to get the optimum performance.
You can also adjust the skill level for each driver. The higher the skill value, the slower they will be. Increasing the grip value will improve all lap times.
BHP has the most impact on acceleration and straight line speed, while skill and grip have the most impact on cornering speed and braking.
If you're doing a full championship season, you should be able to save the game, change the BHP values, and then reload the championship.
Cheers