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In my opinion, car manufacturers are using increased engine technology to increase HP not MPG.
For example, I'm confident that my 5-speed 330ci gets at least as good fuel economy on the highway (easily over 35 MPG) as JMH's 318i. Only difference is, my 330ci has 225HP.
What is that, imperial gallons? Per the EPA website, the best 02 330i is rated at 27 MPG highway. I know that fuel economy values can be handily beaten, so lets draw an analog that I know for convenience.. you can routinely beat the highway estimate by 4 MPG if you drive carefully. So that puts you at 31 MPG.
Now, maybe youre a MUCH better driver than I, and perhaps you are significantly more consciencious of your driving than I am, and so can routinely get 8 MPG over the EPA estimates... I have my doubts, but if you say so, what can I claim... of course, in G0d I trust, all others bring data... but I have no reason not to trust you.
But my point is this - 10-20 years ago, 130hp was a good number. My 318i has more than enough power to get out of its own way, heck, my 83 MB 300D turbodiesel which made 120 hp at full boost on a good day had enough power to get out of its own way.
Now draw all that technology that is being used to fuel horsepower wars, which exist for no other reason than that the masses feel they 'need' it (to cover up their poor driving skills usually), and that they 'deserve' it, when theyre living financially unsustainable lifestyles, and there is an issue.
There is no good reason why BMW couldnt take their technologies that make their engines relatively power dense, and apply them in the opposite way to make their engines more economical at the same power rating. Fuel economy is directly proportional to power output, it is on the owner to not use it, and it is on the car company to not provide it. Some people can get along just fine without it, and perhaps even prefer such.
And the reality is that this stuff exists in Europe. And I think it is smart. Im not looking for the ridiculous, "if Europe is so great, move there" bit, I don't care to, but I certainly can try to learn and desire some things that they do that IMO are smart.
Other people have other needs, and those needs may be different than mine. I used to comute 35 miles each way a day. Before that I was driving (I was a competitive athlete who also worked nearly full time) close to 150 miles a day because of practice twice a day. I really don't need much more than 150 hp for a midsize car, and would love one that could easily get me 40 MPG. At this point, the E-class MBis the only thing out there, and while I can buy a new saab cash, I can't buy a new Mercedes... and for that I am not jealous or care. I LOVE my w123 MB, but I dont even know if Id like the latest e-class. My father has a 96, which is a nice car, but its not my w123... Sure it may be safer, better, even more economical, but a car does have to appeal, like my saab did to me, for, IMHO, reasons other than a nameplate and a horsepower rating.
Having lots of power is great, but what is reasonable for a fun car is not necessarily reasonable for a day to day car, and what someone with gobs of money can do and afford isnt what the masses should be doing. Its the availability of reasonable vehicles that is determined by the masses that is my problem. 190hp may be the old 130hp, but there is no reason why 130hp doesnt work equally well now as it did back then.
JMH