At the start of the model year, the Gremlin was available with either the standard or optional six-cylinder engines. Both had increased power from updated cylinder heads and two-barrel carburetors. In addition, AMC offered a carbureted four-cylinder engine: a Volkswagen/Audi inline-four, also used in fuel-injected form in the Porsche 924. It gave better fuel economy but less power than the standard six-cylinder engines, and reduced the Gremlin's weight by , allowing it to achieve an EPA rating of in the city, and on the highway. It was reserved for the Custom version of the Gremlin because the expense of acquiring the rights to the engine meant that AMC could not afford to make it standard equipment. Of 46,171 Gremlins built for 1977 (13% less than in 1976), 7,558 had the new 2.0 L engine.