iPod Equalizer issue
Well, there are actually a number of different things that COULD be wrong. For example, the Auxiliary (or AUX) cord could have been frayed on the inside, or someone might have chipped a bit of their own cord inside which you just didn't notice, or something else had your attention. You might not have pushed the cord in all the way, at the same time, some systems work better with the cord NOT pushed in all the way, in which case I suggest GENTLY and SLOWLY loosening the cord from the hole to see if the sound gets better. 

The new nano might have come with a (thankfully rare) defect, so you can try taking it to a Genius bar, or if you call Apple about it, depending on the severity of the problem (and if they have nothing to do and are bored) they might charge you, and send you a new iPod in the mail, and wait for you to send yours back to them in the box, pending this return before they give back the money they charged as security (to make sure you didn't try to rob them). Now, if all of the above fail, there are 2 things that could be the problem. One problem could be that your car doesn't support the iOS on the new iPod, or the car just wasn't made for adapting to new iPod versions.