M-W says: to arrange in proper order, with an emphasis on pages being ordered for printing. I've only used it in making multiple copies of a multi-page documant on a photocopier. Print five copies of page one and put them in five different output slots, five copies of page two and put them each on the five copies of page one, etc., rather than five copies of page one followed by five copies of page two. Your cars were sort of collating in that they were doing the same sort of thing physically and metaphorically, but it's a bit of a stretch, I think. Interleave might work better as the "right" word. That said I think your companion was a little brain dead not to see what you meant by collate in this context.