So the yet to be released E320 CDI with the new 224HP / 376ft-lbs of torque 3.2L DOHC 24V V6 engine is supposed to get just over 40mpg in straight highway cruising and about 30 mpg in city-only driving and about 35 mpg in combined city and highway driving (all consumer reports estimates). We all know now that the modern diesels are clean and refined, and can deliver as much or even more power than equivalent V6 gasoline engines while running 30 - 40% more efficiently. Well, all that is old news now. Bring on the new news!
What I want to see done is a Mercedes C-Class or E-Class or even the smaller Volkswagens with a small turbocharged and intercooled diesel engine and with as much technology tacked onto the engine to make it more efficient while remaining just an internal combustion engine. I mean stuff like variable valve timing on exhaust and intake valves, DOHC, 4 valves per cylinder, efficient transmission with an effective overdrive gear, etc. A four cylinder engine will do that won't be scary fast but will have enough low end torque for merging around in city driving. Basically what I want to see done is a diesel engine that will not produce the fastest car, but will have neat mileage ratings from EPA: 50mpg/60mpg city/highway ratings. Add on the particulate filter which will reduce soot and NOx emissions with no significant increase in the price of manufacturing the engines and the hybrid car can be sent to the grave early!

The Honda Civic HX has a 1.7 liter gasoline engine that can easily get 45 mpg on the highway. For a gasoline engine that's great. Can you imagine what a small, efficient modern diesel engine made more for efficiency than power can achieve in terms of mpg? At an efficiency rate that's 30% better than that of the Honda 1.7 liter engine, that would come out to nearly 59 mpg. This is definitely possible!!
I know a lot of people who won't mind purchasing a compact car that gets such high mileage without a $3,000 price premium and without having to worry about if the hybrid technology will hold up over time. Unfortunately according to automakers such people are very few to justify the development of such a car. Add on the fact that we live in a horsepower-crazy world and it definitely won't happen. For now, that previledge will be for the Europeans only.