If a touchscreen was the ideal way to interact with a car, why aren't acceleration and braking done through the touch screen? Why isn't steering on the touch screen?
This isn't even necessarily true for phones. Back when I got the early iPhone and iPad for my parents, one thing that they loved about it is the physical Home button - because, no matter where you were in the UI, even if you ended up "lost" (e.g. by accidentally fullscreening some app), you could always escape to a familiar place by pressing that obvious button.
Fast forward a few years, and it all gets replaced by completely unintuitive swipes. They were not happy, to put it mildly.
So a few tactile buttons/wheels/controls can handle those functions...
You can argue that this gets too unwieldy once the UI gets more complicated. But if the UI is too complicated to be navigable with arrow keys, I would say that it's too complicated for a dashboard of a fast moving vehicle.
FWIW touch itself is not really a problem. Sometimes it is indeed more convenient. But when you can only e.g. adjust volume using touch, that becomes much more difficult to do while driving. Same thing goes for navigation and other such things. A good dashboard UX will let you do this using both touch and dedicated physical buttons.