Well Sir, i disagree with u on that one!
the thing is, engines have NOTHING to do with speed. an engine will just give u output in terms of a rotating shaft. its the GEARBOX that decides what to do with that rotating shaft. u could drive a car with an engine or use the shaft to draw water from a well.
Anyways, the gearbox defines what speeds an engine can achieve at what RPM. If u sit in a manual 2005 civic, it will do 120km/h at around 3500rpm while if u sit in a prosmatic which has the same engine, it will do 120km/h at 3200rpm or less i guess (dont remember the figure but i actually tested this) its the gear ratios that define how fast or slow u can drive at a certain rpm. theoratically, it is possible that u make a gearbox such that the 1st gear could go upto 150km/h or just 5km/h on the same engine (say 1.3l idsi). yesterday i went to faisalabad with a friend on his 1.6l gli auto (had p2 paper) the car was doing 120km/h on exactly 2900rpms and i was impressed by that as engine noise was low and economy was good. so technically and theoretically, it IS possible that a mehran would do 120km/h at just, say, 2500rpm if it had several gears or if it had only one verrrryyyy long gear. u see long gears help keeping the rpm low for most of the times (for gud economy) and short gears help accelerate faster but at the price of economy because the engine stays at higher RPMs for a longer time. thats why racing car people usually prefer 4 speed gearboxes, less gears = less time wasted in shifting and reaching peak output of the engine and more time spent staying at higher end of the rpm band (where most power is, usually, for racing cars)
there are literally hundreds of factors to consider when deciding gear ratios for a car. i understand only some of them but the rest are beyond my knowledge and understanding. one of the factors (usually consider by modified car drivers) is also to set gear ratios according to the tire size (diameter) that is to be used for a race...
as for the economy thing, it really matters on the engine's compression ratio and how efficient the engine is. by efficient, lets suppose that all engines of same size produce same amount of hp. say, 2000cc engine makes 800hp but we all know the law of thermodynamics, most of that 800hp is lost as heat and friction and petrol engines have efficiency of only about 25%, so the 2000cc engine will actually give u only 200hp. now, by using more high tech systems, u can increase the efficiency and get 30 or 35% of the power. mind it, u are not INCREASING the power but only recovering some of the LOST power. better cooling system, more powerful ignition system or higher compression can get u some extra efficiency. Diesel cars have 35-40% efficiency, thats because the compression ratio is very high (14-17:1) but why cant a petrol engine be given that much compression? because with compression comes heat, and petrol is much more volatile then diesel at and a certain temperature, heat alone would be enough to ignite it, so thats the limiting factor for petrol and these engines can only be given a max comp ratio of 12:1 or even less. while diesel cannot burn unless its heated to 65 degrees. thats why diesel cars have heaters in them and they usually dont start on cold mornings. oh, im sure u know this but some readers might not, why does more compression means more power? because if u compress it more and then ignite the mixture, the blast will be bigger. same concept as the more air u blow into a balloon, the harder if bursts.
so, everything else remaining constant but u just scale down the engine of a civic or and idsi to 800cc (theoratically) u ll get much better fuel economy then a mehran. because a mehran uses literally no technology at all... I hope i havent gone too off topic and am not boring u guys...