As others have mentioned, any "lossless" file format (FLAC, ALAC, WAV) should provide the exact same quality as the original digital source, e.g. CDs in this case.
Having said that above, not all devices will play a "lossless" file exactly as encoded, as many phones and/or stereo systems will still "re-sample" the audio prior to analog output.
Having said that, however, any perceived lack of "punch" is more likely a problem with the stereo system's gain or EQ settings than it is due to a physical CD vs digital file issue...or just that the audio system as a whole isn't capable of what you're after.
Most of these adapters are designed to function as DACs (Digital to Analog Converters), i.e. they're meant to take a digital source in via USB and convert to analog out of the 3.5" jack plug, they don't work in reverse... a portable CD player with a 3.5" jack is already outputting analog signal
But did that actually work???
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Here's the thing OP, AFAIK, there is no "AUX" port for the factory stereo, which is what you would likely need to get an external CD player to work...as those old AUX ports are designed to receive analog audio input.
The vehicle USB port capabilities are usually only compatible with USB storage devices, which a portable CD player is not, and the internal infotainment system is probably not capable of interfacing with the portable CD player to use a playback device.
In other words, when you plug something into the data USB hub, the vehicle expects it to be either an iPhone, Android Phone, or USB storage disk (thumb drive) with music files on it... if it doesn't detect a compatible device type, it will only operate as a charger.
I'm not saying it's impossible, as I definitely haven't tried or tested using any external CD players -- but my guess is that they are unsupported...unless what Kaliyat said above is true and actually worked for them.