Variable compression ratio is the technology to adjust internal combustion engine cylinder compression ratio to increase fuel efficiency while under varying loads. The paper presents a new design of a variable compression ratio engine that allows for the volume above the piston at Top Dead Centre (TDC) to be changed. A modeling study is then performed using the WAVE engine performance simulation code for a naturally aspirated gasoline V8 engine. The modeling study shows significant improvements of fuel economy over the full range of loads and especially during light loads operation as well as an improvement of top power and torque outputs. Adjusting the Compression Ratio CR from the low speed wide open throttle knock limited value of CR=10:1 to a variable CR=10:1 to 15:1 for better or about same margin to knock over the full range of engine speeds and loads, maximum torque, power and brake engine thermal efficiency are increased by 5%, 12.5% and 4.5% respectively, while operating at 1 bar Brake Mean Effective Pressure (BMEP) and 2 bar BMEP the brake thermal engine efficiency is up to 10% better.