What does it take to make a four-seater car that equals the gas mileage of hybrids sold in the States, but without the expensive battery pack and electric motors? Many cars made for the European market use a simple formula: Put a highly efficient turbocharged direct-injection small diesel engine into your basic super-mini, or “B” segment, car—one size smaller than a Volkswagen Golf—and then make every possible tweak to improve its mileage even more.

The latest example from this recipe is the Ford Fiesta ECOnetic, introduced at the 2008 British International Motor Show in London. And it’s instructive because Ford will offer the Fiesta to North American buyers in 2010, the first of several European small cars that Ford will make and sell in the US. Two days after the show’s press preview, Ford announced a stunning quarterly loss of $8.7 billion and a plan to build several of its European car models, the Fiesta among them, in North America.

But by emitting just 98 g/km of CO2, it’s being lauded as “the UK’s most economical family car” with fuel economy of 61 miles per US gallon—using the European combined test cycle. The car is offered in the UK for £11,800 ($23,600). And because its CO2 emissions are below 100 g/km, it is entirely exempt from the annual British Road Tax (registration fee) as well as the first-year “showroom tax.”

The new Fiesta itself had been launched in January at the Detroit auto show, but Ford kept to its traditional singing-and-dancing extravaganza as it revealed the car to UK buyers. Singing star Alesha Dixon and six backup dancers pulled the wraps off a Zetec S model amidst pounding music, strobe lights, smoke effects, and confetti. (Some of the motoring press chuckled when they noticed the hood was slightly ajar throughout the performance.)

To lower its consumption, besides recalibrating a 1.6-liter TDCi turbocharged diesel engine and fitting a higher final drive ratio, Ford lowers the suspension, adds aerodynamic rear air deflectors, uses tires with low rolling resistance, and even runs low-friction oil and advises drivers on optimal gear-shifting points.