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The air-hybrid engine absorbs the vehicle kinetic energy during braking, puts it into storage in the form of compressed air, and reuses it to assist in subsequent vehicle acceleration. In contrast to electric hybrid, the air hybrid does not require a second propulsion system. This approach provides a significant improvement in fuel economy without the electric hybrid complexity. The paper explores the fuel economy potential of an air hybrid engine by presenting the modeling results of a 2.5L V6 spark-ignition engine equipped with an electrohydraulic camless valvetrain and used in a 1531 kg passenger car. It describes the engine modifications, thermodynamics of various operating modes and vehicle driving cycle simulation. The air hybrid modeling projected a 64% and 12% of fuel economy improvement over the baseline vehicle in city and highway driving respectively.