Atlas now has shown enough lows so I am almost not expecting anything professional or good from them. There has been enough drama. Based on what Atlas has given us so far with the new City launch, my assumptions are rather generous. I was afraid there might be a face-lifted fifth gen under the covers
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The 1.3 in corolla XLi/GLi, I have always heard it shouting, be it manual or auto. Indus gave such a small engine is also not good, but at least they gave an alternate to City in that segment, and now they have Yaris which is a good car.
The best solution for Honda in my opinion is to either retain the current 1.3, or source a 1.3 from somewhere else like Mitsubishi/Nissan, but they won't try this hard for a small market like ours.
And yes, CVT should help a bit due to it being able to go to any gear ratio between minimum and maximum, and if tuned well, City might turn out to be reasonable. But at the end of the day, if there is not enough hp, either fuel economy or acceleration will suffer.