It turns out big boosts in fuel economy at low cost are possible after all.

For just a $160 price increase, GM is boosting the fuel economy of its 2014 midsize car, the Chevy Malibu, by 12 percent.

At 29 miles per gallon (mpg), this 3 mpg jump from the 2013 model vaults the Malibu into the fuel economy pole position in the highly competitive midsize segment.

Consumer pocketbooks stand to benefit. Compared to the 2013 Malibu, the new fuel-sipping technology will pay for itself in just nine months. Over the life of the vehicle, a 2014 Malibu driver will save $2,000 compared to a 2013 Malibu driver.

Despite being recently redone, 2013 Malibu sales have been lagging. In the old days, GM probably would have chosen to boost horsepower rather than mpg. GM's decision to boost mpg clearly shows the auto industry itself recognizes how much today's customers care about fuel efficiency.

This move is not merely a marketing gimmick. GM is not just boosting the fuel efficiency for a small volume "eco" version of the Malibu. It's adding the technology across the heart of its Malibu lineup, the base 2.5L four-cylinder engine.

GM will use three critical technologies to boost MPG: stop/start system, the first of its kind in a midsize sedan sold in the U.S.; a valve-actuation technology known as Intake Valve Lift Control, which essentially better optimizes the engine valve operations; and a new six-speed transmission that saves fuel by reducing the energy required to pump transmission fluid.

This substantial, low-cost gain in fuel economy demonstrates the tremendous innovation occurring in the auto industry, unleashed by high gas prices and increased fuel economy standards. Greater innovation means a healthier, more competitive auto industry.

Higher MPG equals more jobs, more money saved and less pollution. The equation is simple.

This article originally appeared at the NRDC Switchboard.

2014 Chevy Malibu images courtesy of GM.