I have, use and like a small android phone called "unihertz jelly pro", small enough to fit in any pocket and good for my use. After a while with that phone, using a phablet one evening was an absolute eureka moment. I was looking for some sort of product, and on the phablet all the photos looked good. Inviting. Desirable. The whole phablet was fun in a way the small phone wasn't.
After that experience, I can understand that people reach for the big phones in the shop, even if some of them may really want something different in the long term.
And I can understand why retailers stock the phones they do. The phone where instagram looks good is the phone with the right first impression, and one has to optimise for getting the goods out the door.
(http://rant.gulbrandsen.priv.no/unihertz has blah about how I tweaked the phone, if anyone cares.)
Also, even if a smart car would be more convenient for almost everything you do, it won't work for some weekend trips, so you buy something bigger -- there's a bit of that going on too, I think.
It's a nice phone to have in your pocket with the screen off, so you can run instant-message apps, can phone your ex or optionally other people, can run 2FA apps, and so on and so forth. It's not a nice phone if you want to have the screen on.
Unobtrusive and within reach: Yes. Use very much: No.
Some chinese companies that tend to throw shit at the wall to see what sticks are better positioned to do that, but chances are that you'll get a subpar product you won't probably like using, let alone buy in the first place.
Last but not least, the existence of a niche of consumers is no direct indication that such niche will actually buy the product they think they want. This is why a lot of startups fail despite the fact their product should theoretically sell like hot cakes.