Adding such an effect is a little tricky as there are a few steps to follow.
Once completed the sequence will look like the image below. Notice that there are 3 video tracks used.

1. Splice in the video clip on to the V1 track.
2. Using the Effects palette add a blur effect such as Motion Blur (found in the Illusion FX folder)
3. Create a new video track. This will be labelled V2.
4. Add the same video clip on to the V2 track, making sure it is perfectly in sync.
5. Create a new video track. This will be labelled V3.
6. Place the blue playhead at the position needing the blur effect.
7. Open the Title Tool and draw a shape to cover the area needing the blur.
8. Save the title.
9. Edit the title on to to V3 track.
10. With only V3 track active go to the Fast Menu and select Remove Effect. The video will disappear leaving the white shape your created in step 7.
11. Using the Effects palette add a Matte Key effect (found in the Key folder) on to the title on V3.
Your blur should now be complete.
It may be necessary for the blur to move as the face or car moves across the frame. In this case a movement effect will be needed.