Cars definitely kill wildlife too - estimation methodologies vary, but I've seen estimates saying:

• Vehicles directly kill about 10,000,000 native animals across Australia per annum. That's not including habitat loss, and doesn't include insects (birds, reptiles, and mammals only).
• Pet cats kill about 546,000,000 native animals across Australia per annum. I believe that's using a similar definition excluding insects.
• Feral cats kill about 3,000,000,000 native animals across Australia per annum.

Of course, habit destruction and pollution has a huge impact as well.

But roaming pet cats legitimately are a major part of the problem. It is possible to simultaneously replace lawns with tree cover, and reduce the burden of cats. That could also feed into a comprehensive policy of tackling stray and feral cat populations - something which is made harder in suburbs due to roaming pet cats.

As for whether it is cruel: change is a stressor for cats, so a sudden change from outdoor access to indoor-only could increase stress levels, but that is a one-off transition and there could be ways to manage that (for example, by providing a lot of notice of a change and allowing owners to phase out access, or by having a permit system for indoor and outdoor cats, and allowing renewal of existing permits for specific microchipped cats, but no new outdoor cat permits). Outdoor access / hunting outdoors is a form of enrichment for cats, but not the only one possible. Indoor cats can play with toys, and have owners simulate chasing and hunting activities indoors (for example, with ribbons, small balls, chasing cat treats, and so on) to provide similar enrichment. At the same time, the indoors protect cats from stressful situations like encountering or being mauled by dogs, aggressive cats, foxes, brushtail possums, injuries on the roads, and disease.