The sales of Civic saw a deplorable decline when the 7th gen Civic was replaced with 8th generation model in 2006, which not only was bigger and more expensive, but also saw the end of 1.5L and 1.6L engines in favor of lone 1.8L unit. The 7th gen Civic saw sales of 12,352 units in FY2004-05 and 11,998 units in FY2005-06 but witnessed just 6,513 units in FY2006-07 in presence of the 8th gen model.

Civic 8th gen basically became too American. It became bigger in all dimensions.

The 1.8L engine was the beginning of wrong decisions by Atlas. 8th gen Civic (Reborn) was available in 1.6 in some parts of the world, yet Atlas somehow preferred to launch 1.8, a category that did not exist in Civic in Pakistan before, but Corolla had. The 1.6 Corolla SE Saloon 9th gen had been discontinued (in 2003?) and in 2006, Corolla 9th gen was available in XLi/GLi 1.3 or Altis 1.8; Atlas could have selected 1.6 R16A1 and continued the legacy of Civic but they became a wannabe by selecting the R18A1.

Later on the 9th gen (Rebirth) was upgraded to R18Z1 which had less fuel consumption. Later on Civic X also used the same R18Z1. This makes Reborn the car having highest fuel consumption in the recent automotive history of Pakistan.

Moreover the 8th gen had even more drawbacks: low ground clearance.
Cold-air intake was too low and frequently sucked in water from puddles during rain.
The seat was way too low and it was difficult for older people to enter and exit.

All these things pushed people further away from Civic.