Some people want cars. Some people like cars. But everyone is forced to have them in most places in the US due to the feedback loop caused by investing in car infrastructure and sprawl.
Beyond that, though, even if something is a necessity, it’s rarely a race to the bottom. Your insurance example is actually an excellent instance of how markets tend to divide up: there’s the economical market (eg save 15% or more!) and the premium market (eg you’re in good hands). Same with cars.
Also I don't understand how the car market is as same as the mandatory insurance market. There is a race to the bottom on the, say, auto-insurance market while the vast majority of car promotions do not mention price at all, at most advertising preferable financial terms.
Re: cars vs insurance, used cars are the economical choice, so new car commercials are targeting the premium demographics.
0: https://www.sciencedirect.com/science/article/abs/pii/S09658...
Why car manufacturers don't advertise to the "necessary" buyers at all? A new Kia Rio is still cheaper than a used MB GLS.