What would you say to a child who says this?

I would've told him exactly what you would've done if your son was behaving that way and I'd also say that putting someone down has no place in your car.

Same here. I'd also be having a very frank discussion with him/her when we got home. I don't tolerate disrespect. 

What did you do? You didn't just sit there did you?

If one of my friend's almost-adult kids said that to my friend in front of me, I would have talked to the young man myself and told him he was being rude, inappropriate and disrespectful.  And then the b$tchy part of me might have thrown in a "Go look in a mirror. You aren't going to make the cover of GQ either." depending on whether he looked sorry or defiant.

Okay.  I think we take different approaches - I'm in the "it takes a village" camp, and don't hesitate, especially with older kids to share my input, and I'd value it from other adults to my kids.  It usually has a MUCH stronger impact to get feedback from someone other than the parent on a teen's behavior. Their own parents - not much gets through.  Other adults are harder to ignore and dismiss.  

At 17, it is okay if someone tells him how inappropriate and rude he is.  It doesn't matter that he is in therapy.  I'm a psychologist and would have told him that. Knowing he is in therapy might have caused me to hold back on the GQ comment, but not from holding a mirror up regarding his behavior to his mother. 

I don't care if he was 17 or 4, I would have done the same thing either way, the same thing I do to any children who need correction in my car/home and their parents aren't doing or won't do it: "In my car/home we do not talk/act like that. You should apologize, but even if you don't, you don't get to keep doing/saying stuff like that."

I know sometimes it can be hard to come up with a quick comeback when someone says something shocking or that you aren't expecting.  I have actually been in a situation similar to yours. It took me a minute to absorb what was said, but then I was able to say, "Wow, that was a hurtful thing to say." I don't think what you say is as important as not letting the person get away unchallenged.

Because I have no filter what so ever:

Listen you stinking little @@@@ apologize to your mother right now before I slap you in to tomorrow.

What would I have done if I was you or your friend?

If it was my kid - I would've laughed. But I don't have those self-esteem issues.

If I was you? I would've told him he was rude and hurtful.

I would have told him that people do not say those things in my car and if he wishes to continue being a passenger, he will shut up, smarten up, and apologize. I don't really give a rat's ass if it's my kid or not, I won't tolerate that kind of bullshit and I wouldn't sit there like a lump and let it happen. Especially if they are in my vehicle or home.

I don't let people denigrate others in my presence.

That is just as awful as what the teen said. I do not believe saying something hurtful to another person is ever nice. 

OP, I wouldn't have said anything either. It sounds to me like your friend was trying to cover up for her son's rude behavior with the comments she made. I'm sure she was embarrassed by his behavior and she probably felt awkward and embarrassed about what he said. I hope she spoke with him privately about what he said.

On that note, I wasn't there and I don't know their family dynamics, but we make goofy, joke making family and maybe he didn't mean it the way it sounded(?). Or maybe he did, I don't know. 

I probably would have told him he was rude and shouldn't speak to his mother like that but I can understand why you said nothing. Some people will defend their child's bad behavior no matter how awful it is and actually get angry at the person trying to help. I'm guessing since you said she was excusing his behavior she might have fell into this category.

My standard response to kids who are being rude to their parents (mine, or someone else's) is, "Who do you think you're talking to?" Typically, the kid backs down immediately. If not, I follow it with, "She's not your friend, she's your mother, show some respect."