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The demand for fuel-efficient, low-displacement engines for future passenger car applications led to investigations with small DI diesel engines in the advanced engineering department at Mercedes-Benz. Single-cylinder tests were carried out to compare a 2-valve concept with 241 cm3 displacement with a 422 cm3 4-valve design, both operated with a common rail injection system. Mean effective pressures at full load were about 10 % lower with the smaller displacement. With such engines a specific power of 40 kW/I and a specific torque of about 140 Nm/I should be possible. In the current stage of optimization, penalties in fuel economy could be reduced down to values below 3 %. The “4-cylinder DI diesel engine with 1 liter displacement” is an interesting alternative to small 3 cylinder concepts with higher displacement per cylinder. An introduction into series production will not only depend on the potential for further improvement in fuel economy of such small cylinder units.