This article is from the Car Audio FAQ, by Ian D. Bjorhovde (email@example.com) with numerous contributions by others.
The "soundstage" is the position (front/back and high/low) that the
music appears to be coming from, as well as the depth of the stage. A
car with speakers only in the front will likely have a forward
soundstage, but may not have enough rear fill to make the music seem
live. A car with both front and rear speakers may have anything from a
forward to a rear soundstage, with an accompanying fill from the softer
drivers depending on the relative power levels and the frequencies
reproduced. The high/low position of the soundstage is generally only
obvious in a car with a forward soundstage. The music may seem to be
originating in the footwells, the dash, or out on the hood, depending
on how the drivers interact with the environment.
The "stereo image" is the width and definition of the soundstage.
Instruments should appear to be coming from their correct positions,
relative to the recording. The position of the instruments should be
solid and easily identifiable, not changing with varying frequencies.
A car can image perfectly with only a center-mounted mono speaker, but
the stereo placement of the music will be absent.