I only understand this topic a bit because I write software for authorities that do vehicle registrations and in some cases individual approvals (type approvals are done by others) in an EU country. And my takeaway from contact with them is that they have a huge leeway in individual approvals, so I would put the blame squarely on them, and the solution would be to legislate that away (ban those ind. approvals that are obviously circumventing the usual road vehicle restrictions incl. size, noise, pedestrian safety etc).