Question

What happens to the momentum of body when it collides with a much larger body which is at rest i.e. when a car collides with a iron wall, how does the momentum conserved?

Answer 1

The momentum is always conserved. But your incident can't explain it because there is frictional force acting on the car. If frictional force is absent then the car would go backward with the same velocity of initial.
Hope you understand.