The automotive market is continually driving the suppliers of turbochargers to push their designs into new unexplored realms. The most recent request is to have improvements to the surge margin at higher pressure ratios due to the demands of modern Diesel and gasoline engines. This study looked back at historic casing treatments and investigated the concept of axial grooves being applied to the shroud of a centrifugal compressor. This paper presents a literature review of previous centrifugal compressor casing treatments and explores in detail the axial groove type casing treatment. The study is comprised of two main sections, a test campaign and a numerical investigation. The test campaign compares the axial groove casing treatment against a baseline case without a casing treatment and a typical ported shroud casing treatment. Results are presented along with an explanation of the changes to the performance over the baseline case. The axial groove casing treatment is shown to be able to improve the surge margin as desired in a very package orientated manner. The second part of this paper looks at a similar axial groove casing treatment but for a different centrifugal compressor stage. A computational fluid dynamics (CFD) study was carried out to investigate and provide understanding to the fluid mechanics surrounding the axial groove casing treatment. The CFD and test data are not compared; rather an independent CFD study explains the basic mechanics of how the axial grooves interact with the impeller in order to explain the performance changes seen between a baseline case, and a case including the axial groove casing treatment. Axial grooves at the impeller inlet are shown to be an effective method of improving the surge margin with a limited effect on efficiency, whilst working within a package restricted design space.