"Every company is going for smaller engines" said Andrew Fulbrook, a London-based senior manager at analysts CSM Worldwide. This new generation of engines will have better fuel economy and lower CO2 emissions but will remain fun to drive, he said.
To successfully achieve this balancing act, automakers are:
-- Supercharging and turbocharging engines
-- Using direct injection technology
-- Reducing the number of cylinders
-- Lowering engine displacement.
"CO2 is the big story," said Andrew Close, London-based senior technical research analyst at Global Insight. "The regulations around this and fuel price are driving the changes."
CSM expects production of gasoline engines with supercharging or turbocharging, which compress the air before it enters the combustion chamber, to grow sharply from 7.3 percent of the 22.8 million engines built in 2008 to 16 percent of the total 26.1 million engines it expects will be made in 2014.
CSM's Fulbrook predicts most of these engines will be in the 1.2- to 1.6-liter range. In parallel, the proportion of smaller engines will rise and more four-cylinder powertrain blocks will replace six-cylinder engines.
Volkswagen group and Renault are leading the way in making smaller engines, but Ford, General Motors and Fiat are not far behind.
VW is working on a range of engines from its V-8 turbo, which will replace the V-10 normally aspirated engines used on Audi A6s, down to 600cc two-cylinder and 900cc three-cylinder engines for its Up small-car range. The majority of these engines will be launched in 2010.
Smaller engines no longer mean reduced performance. VW's 2.0-liter turbo-gasoline unit "has the comparable power as many six-cylinder engines on the market today," CSM's Fulbrook said.
Renault plans 900cc engine
Many of the smaller VW engines will come from the group's plant in Mlada Boleslav, Czech Republic. The facility is the company's base for small powertrain production and will likely have to be expanded to meet rising demand.
Renault is already building a 1.2-liter turbo-gasoline engine for the Twingo and Clio. The company is launching a 1.4-liter turbo-gasoline engine at the beginning of 2009 for the Scenic and Megane, aimed at people who currently buy the 2.0-liter engine versions.
And in an indication that the downsizing trend is gathering force, Renault plans to launch a 900cc three-cylinder engine for the Clio in the fourth quarter of 2010 to replace its 1.2-liter gasoline engine.
This engine will also be used in the new Clio starting in 2012, as well as the Dacia Logan. Renault makes its small engines in Douvrin, France, and Valladolid, Spain.
GM is also steadily reducing engine size on some of its top-selling models. It has come to market with a 1.6-liter turbo-gasoline engine for Opel that is a replacement for its 2.0-liter and 1.8-liter engines.
The company is also developing a 1.4-liter turbocharged engine to entice people to switch away from popular 1.6-liter engines. This powerplant will appear in the Astra in the third quarter of 2009. The engines are being built at GM’s plant in Aspern, Austria.
Mike Arcamone, vice president of GM Powertrain Europe, said engine improvements are a cornerstone of the company's strategy to reduce emissions and improve fuel efficiency.
"We will downsize gasoline engines and make more use of turbos," he told Automotive News Europe.
Global Insight's Close said different automakers are taking different approaches.
While Fiat and Volkswagen are downsizing engines but keeping their power through supercharging and turbocharging, the French manufacturers and GM are using mainly smaller engines.
Ford seeks eco-boost
Ford is a little way behind, but has already introduced the 1.6-liter turbo-gasoline EcoBoost, which is aimed at replacing the 2.0-liter and 2.3-liter gasoline engines in its Focus, Mondeo, S-Max and Fiesta models.
Said a Ford of Europe spokesman: "Compared with more expensive hybrids, EcoBoost builds upon contemporary, affordable gasoline engine technology and improves it, providing more customers with a way to improve fuel economy and emissions without compromising driving performance."
Ford's Bridgend factory in south Wales could grow if its EcoBoost engines find broader usage. GM and Ford could leverage their global production base to start supplying smaller engines to North America.
According to CSM, Ford will supply 300,000 1.6-liter turbo-gasoline engines a year to the US by the end of 2009, while GM could be supplying 80,000 of its 1.4-liter turbocharged gasoline units to its home market starting in the second quarter of 2010.
The Ford engines would come from Bridgend, the GM units from Aspern.
Said Fulbrook: "Europe is a small-engine center, so the American automakers will look to use its experience and expertise."
The downsizing trend is less clear at German premium manufacturers.
BMW has historically steered away from turbocharging, preferring to rely on naturally aspirated engines and lightweight cars.
But Global Insight's Close said BMW had already started reducing its 3.0-liter diesel to 2.0-liter diesels. "It's downsizing, but on a different scale," he said.
Japanese manufacturers Toyota and Honda meanwhile are concentrating on improving the efficiencies of their existing engines.
Fiat is working on even smaller engines, including a two-cylinder 900cc gasoline engine for the Fiat 500 and Panda minicars, and a turbo direct-injection version of a 1.8-liter gasoline engine.
Analysts say that, after vehicle weight reductions, lowering fuel consumption through more efficient powertrains is the best way to cut emissions. And the best way to burn less fuel is by using a smaller engine.
Said CSM's Fulbrook: "We will probably see a 1.2-liter turbo-gasoline engine in a Volkswagen Passat by 2010."