I guess modern crash safety does require decent crumple zones, but I'm not sure in how far Europe is different than North America in this.

If anything, small vehicles aren't a thing in NA, but extremely popular still in Europe, even though SUVification is also happening here.

There's plenty of small cars left, like the Toyota Aygo X. Renault is also working on a new electric Twingo, and the new 5 isn't huge either.