Revealed at this year's Geneva Motor Show, new versions of the Fiat 500 are set to go on sale in Europe from September, powered by the company's new two-cylinder turbo-charged TwinAir engines.
The 900cc engine family - the only two-cylinder car engines available in Europe - will feature one naturally-aspirated and two turbo-charged versions, developing 50kW, 65kW and 78kW respectively.
The 65kW Twin-Air engine is scheduled to make its way into European variants of the 2010 Fiat 500, offering 25 percent more power and 15 percent less fuel consumption than the current 1.2 litre engine.
Fuel consumption is also down 30 percent compared to the 1.4 litre model (the only engine offered with the Australian-delivered Fiat 500) while offering comparable power.
Fiat says the new engine offers fuel consumption as low as 4.1 l/100km when fitted with an automated manual transmission, while a five-speed manual version uses just 4.2 l/100km.
More importantly for the strict European market, Fiat says the TwinAir engines emit around 30 percent less CO2 than a larger engine of equal performance.
According to Fiat, the two-cylinder engine's compact dimensions also make it perfect for hybrid applications, having been designed specifically with future electric motor and kinetic energy recovery combinations in mind.
Fiat Australia has confirmed that the TwinAir engine family is not likely to appear in Australia unless tax benefits similar to those available in Europe are put in place.
"Without an automotive tax system based on CO2 emissions and a graduated tax system to aid the new generation of super-low emission/high technology cars into the market, they cannot be price competitive in markets such as Australia," Fiat importer Ateco's Edward Rowe said.
"This situation is further complicated by different states having different systems designed to encourage lower emission cars."