A small displacement direct injection diesel engine family is being developed to improve thermal efficiency as compared to the IDI version.4- and 6-cylinder in-line engines of 2.5 and 3.7 liters displacement, both naturally aspirated and turbocharged are designed. Fuel economy of these direct injection engines is compared with the corresponding indirect injection diesel engine family at the same level of performance. It appears that with direct injection good fuel economy is achieved. However, emission constraints have to be taken into account. For different applications compromises between fuel economy and emissions complying with government regulations have to be found.