We went through this in '73 on. Why do you think Ford, GM and Chrysler started making smaller cars. To compete with the Asian imports that were becoming so popular. Even a 4 cylinder Ford Pinto only got 17 to 23 mpg, where a Toyota got 28 to at least 35mpg. People got used to stable prices, and a good economy year in and year out, and the growth for bigger vehicle started again. Now Nissan and Toyota are making huge trucks, and Nissan is making a huge SUV. Honda is a lot bigger in it's car size(interior volume), Toyota and Nissan have made big increases too, except Toyota has gone back to making smaller models available. I think a change in consumer mindset will change the need for certain products, and manufacturers will have to conform to the consumers will.
But we don't all live in the city. Yes the majority of Canada's population is in central Canada. But I choose to live in rural Ontario, and I need a bigger vehicle for my choice in career. And some other people do too. I think someone was on the right track to ban large SUVs from the city. If you live there, and don't need it, buy something smaller.