Now what happens when those 177 cars are going to 100 different places?
The problem is when those 200 people want to go to 100 different places spread throughout hundreds of square miles of evenly low density suburban sprawl like a modern US metropolis.
Absolutely. But there will always be people who want to get to locations spread all around even a metropolitan area (as well as further-flung locations around that area), and while it's possible to build a public transit network to get them there, with enough throughput to cover the volume of people, the latency will still be worse than a point-to-point trip directly from point A to point B.
The buses can have 20-40 stops in those 4 miles, mind you. I don't mean it's all due to traffic.