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