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Small and medium cars were plenty available in Europe.
European made ones, the few that made it to North America in the 70s and early 80s (excluding BMW and MB) other than being smaller and more fuel efficient were not very reliable. The Japanese cars were the same size as the European models (in general) but much more reliable.
Given the market penetration of the Japanese manufacturers in the US market I am surprised by how low their market share is in Europe (and has been for a long time.
Now I know Japan's domestic market is heavily protected by non tariff barriers