"The luggage is in the car."
Grammatically it is correct but it is not natural. If you talk about something, naturally you start with the topic first.
You can use this sequence naturally if it is negative
There is no luggage in the car.
(In the car, talking about luggage, there isn't anything.)
or if you have other information
Although there is luggage in the car, it can't be opened.
(In the car, talking about luggage, although it exists, it can't be opened.)
Although there is luggage in the car, there is nothing else.
(In the car, talking about luggage, although it exists, talking about other things, there isn't anything.)
You're correct in that あります would mean "Luggage exists inside the car," which is how a Japanese person describes where something is. We would use "is" in English, but not in Japanese. One of the hardest things about learning a new language is breaking the habit of looking for analogs and just accepting that people from other countries say things differently.
Technically, it seems like it should work, however this is a problem you run into when you're combining lesson plans from different places that were created independently of each other. We haven't learned the kanji for "車内" yet in Duolingo, but I assume your answer would back-translate to "[The luggage] is (inside the car)." I also don't yet know the difference in nuance between 車の中 and 車内, although auto-correct is constantly insisting that we're talking about something related to 社員 rather than 車.
「車の中には荷物があります。」 I gave that as a translation and was marked incorrect. I want to improve my understanding of when -には is appropriate, and this seemed like a situation where it would work... I suppose it should work, but it stresses the location "inside the car" as the subject rather than "luggage"... So would that mean my -には usage would be more like "Inside the car, there is luggage."?
So would that mean my -には usage would be more like "Inside the car, there is luggage."?
yeah, I believe so. Another one would be "there is baggage inside the car". I don't think the は is really needed there, you can just say「車の中に荷物があります」。
The reason why 荷物は is marked as the topic as a translation for "The luggage", it's because the speaker is assuming that the listener already knows what the 荷物 part means, and what's important in the sentence「荷物は車の中にあります」is the「車の中にあります」part and not the topic. The は in there shift the focus in the sentence to everything that's not marked by は.
Its the difference between "saying new information" and "saying something about something".
「荷物は車の中にあります」"speaking of the baggage (the listener already knows what baggage means in this context), (it) is inside the car" (and concludes with information about the topic).
「車の中に荷物があります」"there is baggage inside the car" (new information).
には as a compound particle is just the combination of に and は、sometimes used as a grammatical expression of "concerning 'x'" or "for 'x' thing".
「この荷物は私には重すぎる」"(as for) this luggage is too heavy for me"
But most of the time you use it when you want to mark something that is grammatically connected to the verb by に as a topic.
「その部屋には荷物が多い」"that room has a lot of baggage in it" or "there is a lot of baggage in that room".
In this case は sounds more natural because the important part of the sentence is "there is a lot of baggage".
Some material about には:
It's not necessarily wrong, it just adds a different nuance so probably isn't immediately accepted as a translation.
Since we are saying "the luggage", with "the" which refers to specific luggage, we can assume it is known information in English. Known contextual information would be marked with the topic particle は. This puts emphasis on what comes after it, so here it would be the location being stressed, as that is the new important thing we want to say about the specific luggage. "On the topic of the luggage; it is in the car"
が introduces new important information to the listener. This puts emphasis on the existence of luggage, like saying "Luggage is the thing that is in the car"
TyrantRC also explains a bit in the above comment https://forum.duolingo.com/comment/23376379$comment_id=38039583