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Downsizing vs. downrevving, that's somewhat of a great dillema. I'm not totally unfavorable to downsizing, but it's more than simply dropping a smaller engine and leaving all else equal. There were times when subcompact cars fitted with naturally-aspirated 1.0L engines held over 70% of market share in my country, basically due to fiscal benefits, but it was not unusual for the very same cars to get better mileage in export markets where displacements around 40% to 60% higher were the standard, since it enabled the usage of higher differential ratios and a decrease to the engine speed while cruising.
OTOH a truly-downsized engine, fitted with forced-induction and direct injection, is likely to fare better than a naturally-aspirated one with a larger displacement and port-injection, mostly because direct injection enables it to run leaner, but there are also some concerns about long-term reliability that still favors old-school engines and downrevving among some conservative folks.
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