This navigation issue is more noticeable in an automotive application than on other devices, because you often want to keep your eyes on the road. In the Highlander, I found that I could reach out and turn the temperature dial with barely a glance. In the Prius, I would have to focus my eyes on the GUI and then back at the road multiple times before the setting change was complete.

Relative and absolute settings
Let's remove the navigation issue and compare the two interfaces with the assumption that the climate control settings are always available on the GUI. Even in this scenario, the interface with dials was superior.

Figure 4 shows the layout of the screen for adjusting the fan speed. There are five settings. The inverted box highlights the current setting. The user can press any one of the other boxes to select a faster or slower speed.

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For some settings, the user cares about the absolute value that is set. For example, if I am entering today's date, then one number is right and all other numbers are wrong. In the case of fan speed or temperature, the user rarely cares about the numeric value. They want the fan to blow faster or slower, regardless of what the current value is.

The layout shown for the touchscreen requires the user to read the current value and touch to the left or right of it to make it faster or slower. This means that it will be impossible to touch the screen to make the car warmer without first looking to see which box is currently inverted. The box to touch to make the fan go faster may be different every time.

With the dial, the user can put their hand on the same dial, in the same position, and turning clockwise will always make the fan faster. This is a control that can be used without looking at it. It's not particularly important whether the user does look at the display, what matters is that a control that can be used blindfolded is usually more intuitive than one that requires the user to read the display first.

I believe that the touchscreen control of fan speed would have been far better implemented as two buttons, one for faster and one for slower. That would have left the user with two touch targets, rather than a row of five. Two buttons could then be far larger, which is a big advantage. Remember these users have to move their hand from the steering wheel to the touchscreen and the further the hand travels, the harder it is to land accurately on a small target.