Why is CAN protocol preferred to be used in automotive application?
A few reasons :


CAN was developed by BOSCH, which have a lot of influence in automotive equipment (engine control, braking, body, gearbox control...). BOSCH ensured that CAN killed competitors like the VAN protocol. (CAN was patented, and BOSCH sells CAN controller IPs)
CAN is much cheaper than Ethernet.
There were no suitable industrial bus at the time, using physical layers like RS-485 : Modbus, Profibus...


Now several other busses are used in automotive applications :


LIN : Slower, cheaper than CAN. For very simple devices.
FlexRay : Faster than CAN, deterministic. For advanced real time functions like dynamic suspension.
Ethernet : The future, particularly in a 2 wires implementation. For a few advanced applications, including steer-by-wire, video...


Anyway, CAN is here to stay as it offer a good balance between performance and cost of implementation.