Elimination of the conventional cooling system of a diesel engine and the incorporation of structural ceramics for the combustion chamber continues to receive attention worldwide. Application of this concept for a light-duty diesel engine installed in an intermediate-size passenger car is analyzed by computer simulation. The fuel economy of a water-cooled turbocharged DI diesel engine installed in a vehicle is compared to the fuel economy of low-heat-rejection (LHR) turbocharged and turbocompounded DI diesel engines. Appropriate consideration is given for the differences in loading imposed by the vehicle with displacement scaled for equal vehicle acceleration performance. On a combined EPA fuel economy basis, the LHR turbocharged engine is estimated to give 6% better fuel economy and the LHR turbocompounded engine is estimated to give 13% better fuel economy in the LHR vehicle in comparison to the water-cooled turbocharged engine in the baseline vehicle. Given consideration of emissions, driveability, and realistic power turbine efficiencies, achievable fuel-economy gains are expected to be somewhat less.