I might be slightly offtopic, but underpowered was never a complaint I heard about City 1.3. 1.3 Auto, well auto is a recent trend and most older 1.3 City on the road are manual. It may have just enough power, as someone else said, to get from point A to B, and a reasonable cruise on the motorway.
This is why my opinion is that Honda is better off keeping the 1.3 engine from current generation, and add CVT. A well tuned CVT will be able to pull good economy from the 1.3 engine, it is 98hp, similar to Yaris 1.3.
Now the 1.2 L12B3 is losing 9hp, and 9nm torque, pulling a similar, slightly lighter car. So if the whole system turns out to be underpowered, it will require to push accelerator hard or bear everyone honking, and the practical fuel economy might drop. Screaming XLi/GLi might change to now screaming City 1.2.
An excellent application of fuel-efficient system is Ciaz 1.4. With a lighter design, Kerb Weight of only 975 Kg, and 1.4 engine that has been tuned to produce 91hp. Overall, the system has adequate power, and excellent fuel economy.
Honda could have done something similar, but we should forget about them developing custom models for our small market.