Yaris has also built a reputation as a worthy replacement of XLi and GLi, and it is Atlas's fault. Kept the decades old City going, letting Yaris run unopposed. Now, Atlas brings an old City.
Fanboys will buy City or Yaris (depends on which side they are on). For most buyers, the equation will be balance of features and price, and on top of that, Yaris's reputation that it has built with no competition. And if in doubt, Toyota can give a facelift.
So City sweeping the market is unrealistic. City getting decent sales is a reasonable expectation.
My opinion: Unless Honda gives a really great price (which is unexpected), Yaris will still lead the sales in this segment, with City being second. Close second or by a large margin will be determined by the price.