Many terrorist leaders realize how counterproductive these bombs are, but have a hard time getting their more bloody minded cohorts to keep the civilian body count low. The problem is, avoiding civilian casualties is very difficult. Suicide car bombs require a team of highly skilled technicians. The easiest part of these missions is building the car bomb, the hard part is recruiting capable bombers, and training them to the level where they can keep civilian casualties low. The bomb team also includes scouts, planners (who find targets, and how to get at them) and people who run interference for the bomber. No Islamic suicide bomber operation has been able to put together a team that could consistently get "clean" (no, or very few, civilian dead) kills.
The pro-bomber terrorists insist that if they don't bomb, the Islamic radicals will be seen as impotent, and will be crushed. But the logic of continuing with the attacks is, in the long term, just as hopeless. Then again, the terrorists live for media attention, and killing lots of people always gets that. Islamic terrorists, most of them, are not really thinking in the long term. So for most terrorists, a spectacular bombing today, is worth the ill will they accumulate down the line.
Suicide car bombs are the poor man's cruise missile. They enable a weaker, especially a less capable, force to inflict losses on a more powerful foe. For example, the Taliban and al Qaeda have used 41 suicide car bombs in Afghanistan between 2003 and September 11, 2003. Those bombs killed 244 people (41 car bombers, 133 Afghan civilians, 35 Afghan security forces, 18 American troops, 16 NATO troops and one NGO official). Thus for every terrorist lost, you inflict 1.6 deaths on enemy security forces. However, you kill twice as many civilians. This is the fatal flaw of suicide car bombers. In the last twenty years, several Islamic terrorist organizations have undermined their own support by killing so many innocent civilians. The Algerian Islamic radicals, the Egyptian Brotherhood and the Syrian Islamic radicals all destroyed their mass support, and themselves, with their indiscriminate bombing attacks. Al Qaeda did the same thing in Iraq (where they are hated by the vast majority of the population.) The horrific civilian casualties caused by al Qaeda in Iraq, according to several opinion surveys, caused al Qaeda's public image to take a beating. Saudi Arabians, long supporters of al Qaeda, changed their minds real fast in 2003, when local terrorists decided to bring the war home with bombing attacks.