The Public Order Act 1986 states:
"A person is guilty of an offence if he . . . displays any writing, sign or other visible representation which is threatening or abusive"
If he does so "with intent to cause a person harassment, alarm or distress", then "threatening or abusive" is extended to read "threatening, abusive or insulting".
The Act also states:
"It is a defence for the accused to prove . . . that his conduct was reasonable".
As the sign displayed on the car didn't threaten anyone, nor was it abusive to anyone, it's hard to see how an offence could have been committed.
It's ultimately up to a court to decide (if the matter gets that far) exactly what is, or isn't, "threatening or abusive" but there have been some interesting (and, in my opinion, rather odd) court decisions. For example, in 2002 a street preacher was successfully prosecuted under the Act for standing next to a sign reading "Stop Immorality, Stop Homosexuality, Stop Lesbianism" but I can't see how he actually fell foul of the wording about the sign being "threatening, abusive or insulting". (At that time 'insulting' was included within the terms of the Act, even when there was no intent to cause alarm harassment, alarm or distress).
There have been other cases though, without any prosecution, where people have been told to remove signs, including this one which was displayed in the window of a café in 2011:
https://www.signpainting.co.uk/images/poster-bad-santa.jpg