The water is not conductive enough to dead short a car battery. Eventually it would go dead but not instantly.
Why the horn? Because the people who related the experience couldn't SEE the cars. Odds are other electrical anomalies were going on, but those are visual. Sound travels around corners and through walls. Light does not. =================================================
I think Larry's got the right answer. This wasn't a recent flood, but it was a serious one where the storm surge flooded the entire city to well over the tops of the cars. Older cars were wired differently and even the mildly conductive storm surge water (and it's got plenty of salt, dissolved bits of metal and all sorts of contaminants) would set off the horns. The way my (admittedly fractured) memory recalls, they said "the water was rising silently but very quickly when suddenly a chorus of car horns began to sound, only to be drowned out as the cars then submerged completely." It's weird enough to have stuck in my mind as in "who would have thought?"
Back in the 60's and 70's car horn relays used to stick ON a lot more than they seem to these days. That seems to indicate a major rethinking in the way horns are wired. It was the same program where four kids survived a 50 mile trip in an attic that floated away in the storm surge after it became detached from the house. The flooding was pretty serious. Can't remember the hurricane, but I want to say Diane. Probably wrong. That memory's not clear at all.
-- Bobby G.