It doesn't stop Android Auto from doing whatever with the car data, but it's sandboxed to have no more default privileges than a regular app, so it can be denied access to your phone's data by default (apps, contacts, etc.). Wireless AA will only work if you grant it extra privileges; wired AA does not need them.

You can also "firewall" AA via something like TrackerControl, this would let you block connections to eg. Google Analytics servers without denying network access altogether (which would likely cause AA to stop working). I've only used AA with short-term rentals so I didn't spend too much time exploring these options.