Auto (car) is a noun. All nouns in German are capitalized.

All nouns in German are spelled that way. It's a simple rule, just like writing "I" instead of "i" in English. Furthermore, there are some nouns in German that look exactly like verbs, so it would be really complicated to distinguish the meaning if nouns were written with small letters. Or maybe not, as nouns are always followed by articles. :) So, just learn this rule once and you'll never forget it.

Because it's a noun. And all nouns are spellt with capital letters.