Personally I prefer a mixture of both. Touch screen for anything you don’t need to operate while driving and physical for everything else.
Android Auto navigation, car system/audio settings, clock and system management, etc should all be a touch screen so you aren’t navigating through turning knobs and pressing up and down buttons to go through various menus like your programming a microwave.
Knobs and dials and buttons for anything to do with audio volume, skip/reverse tracks, etc. and air conditioning.
I always wondered if instead of a two lane road every block you could have a city where it’s a four lane road every two blocks, with a single lane pedestrian/bicycle street alternating every other block there isn’t a road.