Certain cars have a very distinctive look, and intentionally so. If another company were to try to make a car that slavishly tried to copy their distinctive look, then I think the first car company would have every right to sue the second car company. E.g., if another company were to make a car that would take you a minute to notice the difference between it and a Nissan Cube, then Nissan would be well within its rights to sue.
On other other hand, some cars are made to look "just like every other car". Clearly for the cars that are doing this, there is nothing to sue about.
The Jaguar has a very distinctive front-grill. The rest of the car is less unique, but if someone were to copy the Jaguar down to the front grill, then Jaguar should sue.
The Mercedes is not very distinctive to my eye, other than the prominent round Mercedes ornament on the hood. If another car company were to make a luxurious-looking car with a round peace-sign ornament, for instance, on its hood, then Mercedes should sue.
As to whether car companies sue each other in practice, I have no idea. I'm sure they would, however, if they felt that (1) another car company were making a slavish copy of their design, (2) they had a good chance of winning the court case, and (3) the suit wouldn't somehow hurt their image too much.
On other other hand, some cars are made to look "just like every other car". Clearly for the cars that are doing this, there is nothing to sue about.