Moving something on the server is realy chewy on the client that moves the car. Just imagin, it will need the whole ping (to the server and back) until he sees his car moving.

I would still move the car on the client. Collision is not a big problem if you use collision detection also on the client when interpolating (Of course this could create wrong positions but if you update the positions from time to time, this shouldn't be a problem).

There are a lot of methods and tricks how something could be done. You should do a little testing, and playing around to see which one works best for you!

You could also search the net for good ideas.