In Europe there are many cars for less than 500 euros. Even new ones are something around 6k euros. Those of course aren't sedans like but they're still cars.
In Barcelona we're suffering a process of making the whole city available for bikes and its one of the most wonderful things you can see. Almost everyone uses bikes to go work. It's healthy, it's confortable, and you don't need to pay taxes or insurance. I think it's a brainless option.
BTW: I forgot to mention my city runs a public bycicle program since 8 years and it's a total success. For 40€/year you get full access to a bicycle to move around the city without restrictions. I think it was the smartest move the city did.
I don't think you can pass a technical inspection with a 500€ car. At least not in Germany.
Here the only cars you get for that price are obviously broken cars (accident, missing major parts, etc.) or cars that did not pass the inspection.