The development of efficient, durable three-way catalysts with OBD facilities needs cooperation between different areas related to engine, control and catalyst technologies. High-loading Pd and Pd-Rh precatalysts with λ sensors upstream and downstream were evaluated in FTP cycle to find out the appropriate driving conditions for OBD-II. Diagnostic values were calculated by the damping of λ responses caused by the aged precatalyst. The ratio of oxygen storage capacity (OSC) and precious metals were studied to improve the correlation between calculated diagnostic values and the catalyst efficiency. In fact, the correlation from diagnostic values was better to NOx than to THC efficiency by bag 1 and 2 emissions in FTP 75. The amplitude method with two λ sensors over warm converters is commonly used for OBD but hydrocarbon emissions are mainly formed during cold-start periods. Therefore the OBD calibration and catalyst optimal compositions have conflicting demands. The catalyst composition and ageing method were varied to investigate the meaning of precious metals and OSC in developing a single close-coupled converter for small size vehicles with EOBD facilities. The diagnostic values and conditions were analyzed over each cruise phase with these samples. At the beginning of some short cruise phases, the postsensor was few seconds behind the presensor indicating wide excursions from lean to rich/stoichiometric and oxygen consumption from the surface. The co-operation of dispersed or Zr stabilized ceria with Pd and Rh was weaker than with Pt. Dynamic OSC measured in transient closed-loop conditions with engine or laboratory reactor is the right unit to show the practical ability of the catalyst to store and release oxygen in driving conditions. In the future a more precise Engine Management System (EMS) calibrated to engine, catalyst properties, OBD algoritms and several λ/temperature/concentration sensors will cut emissions in warm and hot exhaust gases during steady and transient driving conditions. The catalyst warm-up and light-off (focused on hydrocarbons) is after these trimmings the main development target.