Sure it can. You just embed the tram lines in the road, so that cars can drive on them when trams aren't.
Here's a picture from Naples, but they are common across Europe: http://cdn.c.photoshelter.com/img-get2/I0000bgbDBRzeRa8/fit=...
Here's a picture from Naples, but they are common across Europe: http://cdn.c.photoshelter.com/img-get2/I0000bgbDBRzeRa8/fit=...
Buenos Aires used to have a tram, actually. In the nineties you could still see the rails, on the road as you describe. But buses replaced them in forties because as the city grew the ability to change where public transport could go proved to be very valuable.