Even with a car, you aren’t necessarily regulating millions of individuals - primarily just manufacturers. I suppose there is the odd case where “old joe” removed his catalytic converter and is polluting more than others but that is probably rare.

I don’t get your point on centralization however - more efficient but less robust (just like in software).

Correction - I do get your point

For necessarily centralized industries like car manufacturing the regulations are written to protect the wealthy incumbents competition more than to protect consumers.