This is not a speculation. Back in the 80s, Corona was the competition for Accord. Look at the premio now. It does not compare with the Accord now, they introduced CAMRY. Corona brand has gone.....Premio has not caught up yet.
Honda has cashed out on the success of the Civic and is now moving it upmarket. People are willing to pay the premium price on the Civic, not in Pakistan at this point. City competes with Corolla in size and performance. Newer generations of City will further enhance the value.
Back in the 80s and 90s and even in early 2000s, there were far less Civics than there were Corollas. Honda wants to keep it that way. It does not want Civic to become an Awami brand in Pakistan, the car for the masses now is City.
Honda wants a sophisticated and classy image for the Civic. The 06 Civic fits the bill. The base price on a Civic has shifted from 11,000 dollars to 15,000 dollars in the US. At the same time, FIT ( Jazz) has been introduced at the price point where Civic used to sell last year.
Corolla has a much bigger market worldwide than Honda and won't shift it into a premium market. This is another reason that Toyota has delayed the launch of the new Corolla. They are no longer targeting Civic.
Get ready for City, Corolla comparos:)