In this paper, a low-cost means to improve fuel economy in conventional vehicles by employing ultracapacitor based Active Energy Recovery Buffer (AERB) scheme will be presented. The kinetic energy of the vehicle during the coast down events is utilized to charge the ultracapacitor either directly or through a dc-dc converter, allowing the voltage to increase up to the maximum permissible level. When the vehicle starts after a Stop event, the energy stored in the capacitor is discharged to power the accessory loads until the capacitor voltage falls below a minimum threshold. The use of stored capacitor energy to power the accessory loads relieves the generator torque load on the engine resulting in reduced fuel consumption. Two different topologies are considered for implementing the AERB system. The first topology, which is a simple add-on to the conventional vehicle electrical system, comprises of the ultracapacitor bank and the dc-dc converter connected across the dc bus. The second topology is capable of higher level of regeneration during braking events but requires a redesign of the generator controller. Detailed simulation models were developed to assess the fuel economy benefits of the two topologies for various drive cycles. Design trade-off study was performed to optimize the cost-to-benefit ratio. Simulation models were also used to understand the impact of the efficiency and size of various components on the fuel economy benefit. Simulation study showed a fuel economy improvement of up to 1.3% on FTP composite drive cycle for a small cross over utility vehicle.