Unreal comes with starter content and templates like the car example are we allowed to use this as a base?

Yes, they said you can use whatever asset packs you want. Though I'd advise against using paid assets as redistributing  licensed content is frowned upon. Anything cc0 or free to license in the engine youre using (like those starter assets) should be 100% fine.

Its a free asset that comes with the engine.

Unity has assets like this, and I know people have used them in the past, so I suppose...