Its like comparing apples & oranges in terms of performance potential. I assume you are planning to get the hi-end of either car?
The Honda City only comes in 1.3 liter engine. With only around 85HP, there is NO performance potential except if you are planning an engine swap. It would quickly sprint from 0-90kph quickly but trying to get beyond 100kph will have to be measured by a calendar, not a stopwatch.
Handling is kinda weird. The steering wheel gives absolutely no feedback from the front wheels. Its like playing one of those driving games at your local video arcade and even those would give better feedback than the Honda City. The rear end would slide when pushed but control is difficult. The easiest way to slide and control it is to use the hand brake technique, weight shift technique makes this car skittish. Stock tires are made by Michelin and gives enough grip. Not much road noise either.
The Honda City comes with ABS and airbags, fully fold down seats and good all around view. But none of these would contribute for a good car for "performance" upgrades. Maybe if the Honda FIT would be released locally with a better engine.
The toyota VIOS has the 1.5 M/T & A/T versions. The 1.5 liter engine has around 107HP and a very light body (lighter than the City by around 50Kg). In terms of looks, the recent Fort VIOS test drive had a VIOS on display with body kit & mags. Looks good. Engine potential, you might have a problem upgrading the exhaust but the intake would look like a straight forward job. The major downside is the speedo/tach guage cluster. Its fully digital and you might have a problem installing a "standard" shiftlight & big tachometer. Lowering... no idea if the rear suspension can be lowered or even how.
As standard, the VIOS handles pretty well through corners and willing to slide sideways controllably if pushed hard enough, although having crappy Goodyear NCT3 tires doesn't help in meeting the car's full potential. Stock suspension handles pretty well, surprisingly not stiff for a light car but it would plow the front end somewhat in hard cornering.
Note: the VIOS lacks ABS & airbag but makes up for more engine power, manual tranny option and predictable handling.
My vote would be the Toyota VIOS.


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