The short answer to that is no, it is not illegal to take photos of cars. I won’t go into detail but why would it be, is the photographer invading the car’s privacy? Bear in mind that the property is not a public space, but the person taking the photo is entitled to be there. The issue centres more around the use of the photo.
The easiest way to deal with someone like that is to ask them for the specific legislation to which they are referring, i.e. what legislation provides that taking photos of a car is illegal, and also the section of that legislation. If they want, they can also ask if it is a civil or criminal offence.