This might well be the real world and maybe all the paperwork and T&C's were in order, but it would be a cold day in hell that I gave up on £500 without exploring all the avenues first. I'm not for a second suggesting that the car dealership should be screwed over, but at the end of the day, they still have the car to sell and can presumably get more for it now it has been repaired, so their loss, if any, should be minimal.