Mercedes-AMG has begun producing a turbocharged four-cylinder engine that produces 416 horsepower and peak torque of 369 pound-feet in what is now the world's most efficient and powerful four-cylinder engine.

The 2.0-liter M139 engine increases output from the previous M133 engine by 40 hp and 19 lb.-ft. of torque. The high-performance engine's power output per liter would exceed many supercar engines.

With the M139, we have once again impressively demonstrated the engine expertise of Mercedes-AMG," said Tobias Moers, chairman of Mercedes-AMG GmbH. "Not only is the output per liter unrivalled for a turbocharged engine, the high level of efficiency also demonstrates that the internal combustion engine still has further potential."

To achieve the power boost, engineers rotated the formerly transversely-mounted engine by 180 degrees so it would be more aerodynamic. The turbocharger and exhause manifold now face rearward toward the firewall. The new position improves air flow on the intake and exhause sides.

Engineers also used a highly efficient dual ball-bearing, twin-scroll turbo that improves responsiveness and reduces lag.

An aluminum crankcase provides higher strength, and the piston and cylinder linings are coated with Nanoslide to reduce friction.

Mercedes-Benz hasn't announced which vehicle it will offer the engine in, but it will be one of its compact models, according to the company.