try it with another source to see if it's the car or the ipod.
not sure about ipod nanos, but ipod touches/iphones have a setting you have to switch on to enable video out.
at one point you had to either use a specialized "made by apple" cord (the non-apple made brands didn't work), and at another point you had to switch the wires around (i think the red one actually had the video signal). So just mess around with it, try another non-ipod source, then you'll have a better picture of the situation.