You commit a crime, you must face punishment. If she was well known for DWIs, then I say that taking her car was completely supported with good evidence. I doubt they perminantly took it anyway. More than likely, she could go to the city tow area and get it back for a fee.
If someone is legitimately arrested for drunk driving, forfeiture of the vehicle is fair game. Now, I do believe confiscation of the vehicle should be done after a second offense and not a first one, because everyone makes mistakes. The first offense could have been based on bad judgment that the offender should be allowed to correct.
Losing your car, especially if you live in an area without much public transportation, is a very severe penalty. At the same time, drunk driving is a serious crime that should be punished severely. If you drive drunk, you shouldn't be driving anyway. A more just punishment would be suspending her license for a while and forcing her to take some kind of classes. That would probably be about as effective. Still, if punishments like this help reduce drunk driving, I'm fine with it.
Drunk driving and owning an asset should be two separate issues. She should be charged and fined but the police or government shouldn't have a right to seize her property. Once she has completed her punishment she has completed her punishment. To continue to do so would be cruel and unkind.