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My dad was a volunteer mechanic and Driver of midget race cars back in the 30's 40's and 50's. He always taught me that a vehicle is a several thousand pound weapon in the wrong hands. And yet, with his dementia, he was unable to assess his own ability to drive. My mom and I had to keep the keys from him.
If you truly believe your father is impaired and may harm himself or others by driving, you must take the initiative, whatever is required, to prevent him from driving. That could range anywhere from having a rational conversation about not driving (don't expect that to work very well if he has dementia) to disappearing with the keys or even the vehicle.
HE may not remember what he has done if something tragic happens but you must ask yourself how you would feel if he injures or kills a human being, a child or someone's beloved pet. When something happens if we don't know any better, it's an accident. If we know better and don't act to prevent it ahead of time, it is negligence on our part.
Taking away and elders ability to drive is one of the hardest things any of us will ever do. It strip them of their independence and they and we know it does. So its a frustrating as well as aggravating experience. Without thinking it through to the consequences, some folks are inclined to wait for the doctor or the DMV to "take away their license" but, especially with a dementia patient, that doesn't work as well drive anyway.
As difficult as it is, YOU are the one who MUST take action, and you must take it ASAP once you have identified the problem.