Hello.
Thank you for taking the time and replying.
I don’t believe the problem is with the texture settings. I did what you said with the textures and no luck.
I also imported the same model and the same textures inside UE 5.1 and everything was OK.
I thought maybe Oodle texture plugin is the culprit because it looks like a compression issue and Oddle compresses the textures to reduce package size. I disabled the plugin but nothing changed.
The only odd thing that worked is when I imported another version of this car, I ticked off recompute normals and recompute tangents for the model. And that seems to at least fix the normal map.
In the picture below both the yellow car and the blue car use the same normal map. But the blue car imported with recompute normals and recompute tangents off.
There is some slight normal gradient happening at the bottom of the yellow car. But the blue car seems fine.