In Europe, where fuel prices are often more than double or triple what they are here in the U.S., customers typically favor compact, fuel efficient engines. While many Americans may scoff at the idea of driving a reasonably sized car with an engine not much bigger than that found on a motorbike, it is the norm in many European countries.

This negative perception many Americans have towards smaller engines may soon change. As fuel prices increase, U.S. customers may have no choice but to accept downsizing to smaller engines. Vehicle sales numbers are already starting to show increased demand for four-cylinder engines over V6 and V8 powerplants, and this trend is only set to continue.

Thankfully, increased use of turbocharging and direct injection technologies means small doesn’t have to equate to weak anymore. One of the leaders in this field is Fiat. Through its Fiat Powertrain Technologies division, the Italian giant has created a new range of four-cylinder engines with performance numbers similar to that of a V6.

Take the new 1.75L unit from the upcoming Alfa Romeo MiTo GTA. The compact unit features direct injection, continuous variable valve timing, turbocharging and a revolutionary ECU management system. The result is an engine with performance comparable to that of a 3.0L engine while consumption is maintained at moderate levels appropriate to a unit displacing only 1.75L. Peak output stands at 240hp (179kW), but more importantly this peak is maintained from 4,750rpm all the way to 5,500rpm. Peak torque of 258lb-ft (350Nm) arrives at just 1,500rpm.

Other areas where performance has been squeezed include management of airflow from the inlet manifold to the exhaust manifold to activate the turbocharger as quickly as possible, redesigning the inlet ducts to minimize turbulence, and reducing engine friction to further enhance efficiency.

Peugeot, too, has shown off an own advanced engine system. At next week’s Geneva Motor Show the company will display its MCE-5 technology. Displacing just 1.5L, Peugeot’s MCE-5 petrol engine prototype develops a healthy 220hp (164kW) and V8-like 309lb-ft (420Nm) of torque from a low 1,500rpm. These results are achieved with a fuel economy of 35mpg (6.7L/100km) and CO2 emissions of just 158g/km.

It doesn’t end there as Peugeot is planning to add direct injection technology to its MCE-5 engine and optimize the combustion chambers. With the addition of these features, Peugeot claims its 1.5L engine will be able to deliver up to 270hp (201kW) and 340lb-ft (460Nm) of torque, while delivering fuel economy of 39mpg (6.0L/100km).

Unfortunately, development is still in the early stages and the first production applications aren’t expected until the 2012/13 model years. Mercedes Benz is working on a similar concept, called the DiesOtto, and plans to offer the powertrain early next decade as well.