Being one of the most complex industries, car industry is influenced by many factors. As such, it is influenced by people's way of life, preferences and demands, but also with region's history, both industrial and artistic.
That being said, bearing in mind how packed are Eropean cities and how many are there, it's clear why small, city cars are that popular in Europe.
It's also clear why European car brands are that stylized, one can easily say that European cars are setting trends for most of the design solutions worldwide.
And finally, it's clear why European standards regarding polution are most strict ones.