The peaks represent notes that are way too loud. The dips are notes that are way to soft. When dips and peaks are close together you cannot hear any of the notes in the dips. Fred created a large peak at 80 cycles with his bass control, and then another one at 120 cycles. The dashed line is an accurate representation of the average frequency response found in cars.
Cars have very different acoustics than houses.
Cars are different than living rooms in two ways where stereo is concerned. A living room can reach a noise floor as low as 40 dB in the evenings. This means car stereos must have more power than home stereos just to sound like home stereos. The second is that rooms effect dramatically how the frequency response will balance out. A car is so small that we're not sure if we should treat it like a room or another box.