It definitely sounds like you're being blackmailed. Your best option would be to contact the police about the situation. You may want to take an attorney with you to the police station when you make the report about the individual blackmailing you. Good luck.
Juan C. Garcia, Jr.
GARCIA LAW OFFICE, LLC
Due to a lack of detail, it is unclear whether you have committed any crime, either in relation to the acquisition of the car, or in relation to the pictures he has in his possession. Thus, I would suggest you consult with a criminal defense attorney before you go giving statements to the police. If you are innocent of any wrong doing, then you should not hesiatte to report everyhting to the police, as you are clearly being blackmailed.
I agree with Mr Galivan.
Hire a lawyer. Provide your attorney with all the facts of the matter. Your attorney can contact the authorities on your behalf or accompany you to the police station for the purpose of making a report.
Disclaimer: The information contained in this answer is not legal advice, does not establish an attorney-client relationship and is offered for informational purposes only. Individuals with questions or problems in any area of the law should consult a qualified attorney licensed to practice in the individual's jurisdiction.