The "small, intelligent, light and efficient" vehicle, a modified Renault Twingo, does almost twice as many miles a gallon as its conventional counterpart and cars of similar size, without using any radical new technologies.
Jim Randle, a former director of engineering at Jaguar who is now a professor of automotive engineering, said the re-engineering the environmental campaign group had achieved was "perfectly logical", and called on car makers to respond to the challenge.
"The kind of changes that have been made here might actually make the car cheaper," he said. "At the moment we're going in the wrong direction."
In a road test in Switzerland yesterday covering a 200km course, the Smile's fuel consumption was 43 per cent less than a conventional Twingo. It also did 49 per cent better than a Ford Escort and 45 per cent better than a Volkswagen Polo.
The test, which covered urban, countryside and motorway driving, was overseen by the German certification body, TUV, and its Swiss counterpart, EMPA, to ensure fair play. Greenpeace says its vehicle performs just as well in terms of acceleration and top speed as the ordinary Twingo - although it feels that cars should never be driven faster than 130kph (81mph).
As well as using far less petrol it also produces correspondingly less carbon dioxide - rising emissions of which are the main cause of man-made global warming, and vehicle fumes make a big contribution. It produces no more smog-causing pollutants than a Twingo, and meets the tougher European Union smog standards which come into force next year.
The vehicle represents Greenpeace's biggest and most expensive effort in "solutions-oriented campaigning" - a new strategy which has caused debate and conflict within the international organisation. The object is to identify solutions to environmental problems, then confront a recalcitrant industry with them.
Greenpeace picked Renault's best-selling Twingo because of its striking looks and size; very compact, but still large enough to carry an average family. Its objective was to halve its fuel consumption, but it has not yet quite achieved it.
The re-engineering was done by three Swiss companies amid considerable secrecy and the most important change was the engine. The Smile uses a four-stroke engine with two cylinders in the horizontally opposed, "boxer" position. Its capacity is just 360cc - less than one-third of the Twingo's normal engine.
The project was entirely funded and run by Greenpeace Germany, the wealthiest and best-supported of its national organisations, and it cost 2.5 million German marks (pounds 1.1 m).
Wolfgang Lohbeck, the project leader, said: "People within Greenpeace are still saying that by making the car better we are identifying ourselves with a transport tool we should be fighting. But it's impossible for us to ignore the car - we decided we had to change it." Consumers wanted cars, and more and more would be built as markets in developing countries expanded. Greenpeace had to show how cars could be made less environmentally destructive, easily and cheaply.
"We wanted a drop-in solution, changes that could be made now without futuristic technologies," Mr Lohbeck said.
Yesterday the motor industry in Britain was unaware of the Greenpeace project - with the exception of Renault, which has given no co-operation to Greenpeace.
The Twingo has proved a runaway success on the Continent, but the French car giant has not released it in Britain as yet - although it might offer a right-hand drive version in two year's time.
Renault UK's view was that even if the modifications added only pounds 300 to the price, that would turn away buyers. "Customers won't pay, it's as simple as that," a spokesman said.
But Professor Randle, director of Birmingham University's Automotive Engineering Centre, questioned whether the modified car would be more expensive in production. Based on Greenpeace's descriptions of the alterations, he said he would be surprised if the car was 35 per cent more fuel-efficient overall than a conventional Twingo. But the changes were a step in the right direction.
In the past six years the average car has become about 30 per cent heavier and fuel efficiency -- which improved drastically in the early Eighties - has stagnated or even declined, because of extra safety equipment such as side-impact protection bars, and the public's perceived demand for higher specifications (such as electrically operated windows) and performance.
Europe's leading car engineering consultancy, Ricardo, which is based in Shoreham-on-Sea, West Sussex, said the Smile car's achievements were not remarkable.
"These fuel savings are good, but they have been bettered by the car manufacturers - they know about this kind of technology," a spokesman said. So why were such cars not built? "That's for the manufacturers to answer."
Thilo Bode, executive director of Greenpeace International, said: "The car industry is obstructing feasible technology which would help prevent climate change."Reuse content