My daily vehicle is one of the only "city car" options ever sold in the US, it was originally made for the European market, and I love it. Most of my sports cars are only larger in length than the typical Euro econobox, but aren't considered particularly large. I see plenty of VW, Skoda, BMW, Mercedes, Renault, etc hatchbacks and sedans in Europe and have driven a few myself. I don't think "city car" has to be the only option in Europe, and I don't really see any evidence that there's an attempt to make it so. In some parts of Europe the fastest selling car is the Tesla Model 3. None of these are large vehicles by European standards, and definitely not by US standards.