Once that's taken care of, then the audio can be appreciated. When I last owned a car, it was an enormous Lexus. The audio experience was sublime just with the premium factory system. But with the audio off, the cocoon was still so much better than what I've experienced in "regular" cars.
Unless you're in a Rolls Royce or Maybach while driving, I seriously doubt you'll tell the difference between FLAC and MP3. There's just too much external interference to compete with the subtleties that a high end audio signal can offer compared to a more typical system.
From a 24/96 PCM master I prepared lots of transcodings - 16/44.1, 12/44.1, 8/44.1, 16/22, 12/22, 8/22, 320, 256, 192, 160, 128kbps mp3 with various options for encoding, ditto AAC - etc, etc.
I then used the (brilliant!) ABX plugin for Foobar and an excellent set of headphones, and after a few days I had a fair idea of how good my ears really were. Or, as it turns out, weren't. In most cases, 256kbps mp3 and red book were impossible to tell apart; 320kbps being indistinguishable in all but one case, if memory serves. However, at both 256 and 320kbps I had to listen hard for encoding artifacts rather than just enjoying the music.
Most tracks were eminently listenable at 192kbps mp3, but I could then reliably tell whether I listened to an mp3 or PCM without much effort.
Hard disk cost being what it is, I still ripped all my CDs lossless, though.
128kbps? I shudder at the thought of my 20-year-old-self telling myself and others that it was just about as good as uncompressed audio...
Oh, and you'd be surprised at how little dynamic range is actually utilized; on most tracks, telling 16/44.1 from 8/44.1 was next to impossible.
https://www.head-fi.org/threads/abx-test-of-320kbps-vs-flac-...
https://blog.codinghorror.com/concluding-the-great-mp3-bitra...
I would not be surprised if additional noise, such as road noise, can also subvert masking phenomena in some way, but I don't know of any studies that tested this.
from your other comment, I see that you are using a pretty good DAC in your car. kudos to you, sir.
How many cars actually support FLAC or Apt-X HD?