So regulations on small cars forced people to buy larger vehicles, and their solution is even more regulations, just this time on larger vehicles? How about just relax regulations on the smallest vehicles, making them more feasible?
What they need to do is increase visibility requirements and make the trucks safer for pedestrians.
You can see this in all sorts of corners of the economy where goods subject to different levels of regulation compete.
Seriously though, the purpose of those regulations is to prevent upstarts from making simple, cheap, reliable vehicles and to protect the incumbents. Gotta have a big bank account and a lot of lawyers to redesign and crash test a handful of vehicles every few years.
Modern hybrids still don't match (or barely match) the gas mileage of old, small, lightweight cars despite being substantially more complex, less recyclable, less repairable, and using substantially more (and more exotic) materials in production.
Ouroboros regulations only exist to justify their own continued existence. Cars get bigger? More regulations on smaller (less safe) cars, making cars bigger. Rinse and repeat.
Also, the EPA ratings have changed between now and then getting stricter and closer to actual mileage. That 1980 vehicle would get much lower mileage ratings now than it did then.