arXiv:2610.32626v1 Announce Type: new Abstract: Vision-based image classification models benefit from Federated Learning (FL) across vehicles, however learning accurate models from distributed vehicular cameras is challenging due to data heterogeneity and privacy concerns. To improve performance on non-IID data, advanced FL optimization approaches have emerged that share auxiliary insights, such as client gradient behaviors. While these gradient-guided optimized FL methods improve the model accuracy, their reliance on sharing additional gradient information introduces a previously unexplored privacy vulnerability. In our empirical privacy-leakage experiment, we show that a malicious server can infer clients' label sets from shared guidance matrices under heterogeneous client label distributions (simulated via Dirichlet-based label partitions), between 50% and 84% accuracy. To address this privacy leakage, we propose PPFLex that replaces the central server with three Secure Multi-Party Computation (MPC) servers to securely compute the global guidance matrix and perform federated averaging under semi-honest and malicious MPC server assumptions. We evaluate PPFLex on widely used traffic-sign classification datasets (e.g., GTSRB and BTSC) as representative autonomous vehicle perception benchmarks, comparing against baselines. Our results show that PPFLex achieves accuracy comparable to the plain-text FedLEx pipeline while preventing privacy leakage, incurring acceptable MPC overhead.