A highly efficient new 2.8-liter inline 4-cylinder diesel engine has been developed in response to growing demand for diesel engines and to help save energy while providing high-torque performance. Engine efficiency was improved by reducing cooling loss based on an innovative combustion concept applied across the whole engine. Cooling loss was reduced by restricting in-cylinder gas flows and improving combustion chamber insulation. To prevent the restricted gas flows from affecting emissions, a new combustion chamber shape was developed that increased air utilization in the cylinder through optimizing the in-cylinder fuel distribution. Combustion chamber insulation was improved by a new insulation coat that changes the wall surface temperature in accordance with the gas temperature. This reduces cooling loss and avoids the trade-off effect of intake air heating. To adopt this combustion concept while improving power/ performance, it was necessary to adjust the characteristics of the intake and exhaust ports to emphasize high flows. This was achieved by adopting new intake ports with separated functions, optimizing the diameter and layout of the intake valve, and increasing the overall efficiency of the intake/exhaust system. Since optimizing the ports shapes required greater design freedom, a new cylinder head gasket with high sealing performance was developed, and a 92 mm-diameter bore was adopted with only four head bolts. By adopting this combustion concept across the whole engine, and incorporating various friction reduction technologies, the new engine reduces CO2 emissions by approximately 15% compared to the previous model and achieves a maximum thermal efficiency of approximately 44%.