Engine displacement is defined as the total volume of air/fuel mixture an engine can draw in during one complete engine cycle; it is normally stated in cubic centimetres, litres or cubic inches. In a piston engine, this is the volume that is swept as the pistons are moved from top dead centre to bottom dead centre.
In many nations levels of taxation on automobiles have been based on engine displacement, rather than on power output. Displacement is easy to identify and difficult to modify whereas power output must be tested. This has encouraged the development of other methods to increase engine power.
There are four major regulatory constraints for automobiles: the European, the British, the Japanese, and the American. The method used in some European countries, and which predates the EU, has a level of taxation for engines over one (1.0) litre and another at the level of about 100 cubic inches, which is approximated to 1.6 litres. The British system of taxation depends upon vehicle emissions for cars registered after 1 March 2001 but for cars registered before this date it depends on engine size. Cars under 1549 cc qualify for a cheaper rate of tax .
The Japanese is similar to the European taxation by classes of displacement, plus a vehicle weight tax. In the American system, which includes Canada, Australia and New Zealand, there is not this sort of taxation per engine displacement. In The Netherlands and Sweden, road tax is based on vehicle weight.
Displacement is also used to distinguish categories of (heavier) motorbikes with respect to license requirements. In France and some other EU countries, mopeds, usually with a two-stroke engine and less than 50 cm3 displacement can be driven with minimum qualifications (previously, they could be driven by any person over 14). This led to all light motorbikes having a displacement of about 49.9 cm3. Some people tuned the engine by increasing the cylinder bore, increasing displacement; such mopeds cannot be driven legally on public roads since they do no longer conform to the original specifications and may go faster than 45 km/h.
Wankel engines, due to the amount of power and emissions they create for their displacement, are generally taxed as 1.5 times their actual physical displacement (1.3 litres becomes 2.0, 2.0 becomes 3.0), although actual power outputs are far greater (the 1.3 litre 13B can produce power comparable to a 3.0 V6, and the 2.0 litre 20B can produce power comparable to a 4.0L V8). As such, racing regulations actually use a much higher conversion factor.
Increase and decrease of typical engine displacement in the US
Once V8 engines became expected on large American cars in the late 1950s, and continuing to the oil crisis in the 1970s, there was an engine displacement race in the industry. Firms would put badges on the fenders of cars giving the displacement in cubic inches. This was also a sort of trademark as well. The famous Beach Boys song, "409" refers to any full-size Chevrolet which had an engine displacement (in cubic inches) of that amount, regardless of trim level. This number was not the model number of the car.
In the mid-1960s, Chrysler offered a V8 engine of 426 cubic inches (6981 cm³) on its muscle cars and pony cars. Soon Ford came out with one of similar size, which displaced 427 cubic inches (6997 cm³), and hence was named the '427.'
NASCAR had a maximum 7-litre engine limit during this time and most automakers complied by introducing stock engines with the needed displacement. 7 litres equates to approximately 429 cubic inches, so every major manufacturer had an engine of around this size.