The answer is simple yet brilliant: The three people in the car are a grandfather, a father, and a son.
Here is how the relationships overlap perfectly to match the riddle:
The Grandfather: He is a father (to the dad).
The Father: He is both a son (to the grandfather) and a father (to the youngest boy).
The Son: He is a son (to the dad).
Let's do the final count based on roles:
How many fathers? The grandfather and the father = Two Fathers.
How many sons? The father and the youngest boy = Two Sons.
Just like that, you have two fathers and two sons, but only three actual people sitting in the car!