Below is a video made by my wife that shows what happens to her in-car entertainment system when her iPhone 7 Plus is connected to it via Bluetooth. The problem is not with iOS 10 as she experimented with connecting her iPhone 6S Plus which also has iOS 10 installed.
I just saw today that BMW owners are having similar issues. Hopefully this is a simple software fix that Apple can push to users and not something that needs to be fixed on the automaker’s side. If that’s the case I fear the problem will be ongoing for quite some time.
Here are some other links describing the problem others are having.