Steering mechanism for City-scale vehicle
It's difficult, but not impossible. A rigid axle turning at the centre would be mechanically simpler. As my crude drawing illustrates;
I would place a 24-tooth gear over the 2x4 wheel axle. A 8-tooth gear is optional but will provide finer control over the steering. The two teeth gears can also be replaced with a pulley gear.



This technique however will not work with current Lego CITY vehicals unless the wheel arch is removed or replaced.