Maybe let's not strawman and compare middle-of-the-road cars from all places? Or premium midsizers from each place:
It lost all. It was purely function over form, first car to be designed from the inside out. And it was great at being an MPV - practical, roomy - instead of trying to look "better" but definitely not useful like most of its rivals.
The 3-Series is a luxury saloon, the 626 was a cheap, eco-friendly saloon. The 626 wasn't made to rival the Beemer.
Did you know a car isn't just their body? Also, I'm pretty sure my E36 vs Skyline vs Seville comparo is better.
That was true in the past decades. Japanese cars were often loaded and positioned as sort-of high-tech offerings. Only the top-end trims were made available in Europe and most of the manufacturers applied the "full optional" sticker as a selling point. That's not the case anymore, most japanese cars available in Europe today are nothing more than also-ran, while still looking bland as dishwater.
European cars are on the same level. A Yaris isn't much less interesting than a Clio, a Pulsar isn't far from an Astra, and a CR-V is not far from a Tiguan. --- Post updated --- For example, here is Europe vs Japan vs USA in 2010s midsize sedans: Also, it's kinda moving the goalposts, as the debate started about Japanese and European cars in general.
It might be the best, but it's another front-transverse engine sedan with mostly conservative styling, spruced up by a few wilder cuts, handling in an understeer-heavy way.
I doubt he meant VW when he said european cars have a soul. VW couldn't build a car with a soul if their life depended.
The Avensis is still a Japanese car, even if Europe-aimed (though I could probably have used the Honda Accord with better effect), while the Malibu is an all-American sedan.