I'm building a directory website and i want to represent each subdirectory as a subdomain on my website like: car.mydir.com and not mydir.com/car
So the problem is the total number of subdirectory keywords are way too big. Do you think for example IIS can handle 40000 subdomains?
The number of subdomains shouldn't be a problem.
The main difference between using subdomains and sub-URLs is that subdomains are distributed via the DNS protocol. This protocol is expensive, so clients cache the information for a long time (one or two days usually).
This means that any change in the subdomains will take some time until every client on the net will notice while URL changes are picked up immediately.