ARC - Dolby Atmos - Motorola G84 over Bluetooth in car setup

Hi, guys.
My Motorola Moto G84 (Android 14) has Dolby Atmos. The phone is connected to my car system over Bluetooth with ARC streaming from home and Dolby Atmos enabled on the phone. Unfortunately I’ve been struggling with distortion playing both from my library and Tidal and I could not understand why.
Then I thought of disable Dolby Atmos on the phone, to check if that could have any impact. And it did, bigtime. Not only distortion, but also the dynamic became much better, like another (music)world.
I would like to know if anybody have had the same experience? Has this something to do with Bluetooth and car-amp not supporting DA? That the stream going through the ARC app and then compressed by Bluetooth before reaching the car-amp gives a terrible and distorted result. It also seems like the distortion gets worse the longer and louder I play. It’s like it just can’t cope with all the decoding? The system is a standard Mercedes E-class 2019 stereo with 6 speakers.
Thx