1. Injecting mixed fuel and air directly into each cylinder instead of into the manifold outside the intake valve. Direct injection improves the swirling motion to focus fresh fuel near the ignition source.
2. The other process greatly increases the pressure under which fuel and air are mixed and injected into the cylinders. Higher pressure allows the fuel mixture to be sprayed in a finer mist for hotter and cleaner burning.
But the technology, known as GDI, is proving to be a difficult problem for carmakers and suppliers.
GDI is the European auto industry's latest frontier, much like diesel direct injection was in the 1990s.
With toughening European Union pollution standards, carmakers are trying to develop GDI engines to cut fuel consumption and pollution.
The stakes are huge. If carmakers and suppliers fail to produce attractive GDI engines in the next few years, it's possible surging diesel sales will overwhelm gasoline engines in Europe.
Sales of new diesel-engine cars in Western Europe almost doubled in the last decade. In 1990, diesels made up 20 percent of sales. In 2000, the diesel share was 39 percent.
"Given the performance of diesel, there's no reason why we should rule out a European vehicle market that would be 100 percent diesel," said Andre Douaud, head of research for the engines and energies department at Institut Francais du Petrole, a research organization in Paris.
"The technology for GDI is there, but no one has yet found the way to optimize it," he said.
New rulesSeveral independent laboratories, carmakers and suppliers are preparing for new EU rules designed to reduce air pollution, especially carbon dioxide, which scientists say contributes to global warming.
The first rule, Euro IV, takes effect in 2005. It reduces allowable vehicle emissions of CO2, nitrous oxides and unburned hydrocarbons.
The second phase takes effect in 2008. At that time each carmaker must cut per-vehicle average CO2 emissions on its entire European-built fleet to 140 grams per kilometer.
The key to meeting the regulations is improving fuel economy. Carmakers able to reduce fuel consumption without sacrificing performance will have an advantage over those forced to sell smaller or less powerful cars.
Taking a regular gasoline-powered engine as a standard, a modern direct-injection diesel saves up to 30 percent on fuel consumption with a modestly higher manufacturing cost. For first-generation GDI, the saving is 10 percent with a substantially higher manufacturing cost.
For most buyers, the GDI fuel savings aren't great enough to overcome a higher vehicle purchase price.
Young technologyBut GDI technology is immature. The potential for improving both fuel economy and cost is driving automakers to continue research.
Bosch says it is discussing second-generation GDI with nearly all carmakers.
"I detect no budget restriction on those programs, despite tougher economic conditions," said Roland Lismonde, senior manager, customer projects in gasoline engine management at Bosch.
Bosch says it developed a GDI engine in the 1930s that was adapted for aircraft. But it was Mitsubishi that reinvented the technology in the 1990s using modern electronics.
Mitsubishi GDI cars attracted attention from European carmakers. Renault, Volkswagen, PSA, Volvo and Fiat since have developed GDI models. But no GDI model is a commercial success so far.
For example, VW says its GDI-equipped Lupo FSI accounts for just 2 percent of German Lupo sales. The Lupo FSI with a 105-hp engine costs about $13,700, compared with about $11,800 for a 100-hp non-GDI Lupo. The 26 percent fuel saving isn't sufficient to attract buyers in such a price-sensitive segment.
GDI variationsBut VW is undeterred. It says it will convert all its gasoline engines to GDI in the next five to seven years.
PSA is less enthusiastic.
"Direct injection does make sense for diesel. But for gasoline, there are several techniques that can be used to make it more efficient," said CEO Jean-Martin Folz.
Bosch says it has dedicated 300 people to GDI development. Rival supplier Siemens says it has 150 dedicated GDI workers. Both believe GDI engines will become competitive.
Engineers working on second-generation GDI engines have changed their approach, said IFP's Douaud. Rather than applying GDI technology to a traditional engine, they are developing a smaller and lighter engine based on GDI technology.
Mark Rechtin and Wim Oude Weernink contributed to this report.