Electrification of the powertrain to improve vehicle fuel economy is a key technology to achieve strict fuel economy legislation. However, only limited numbers of small class vehicles such as a B segment adopt electric powertrain. This is presumed that cost effectiveness for fuel economy is small and mounting space for additional powertrain is limited. In this paper, the optimum solution of a strong hybrid system suitable for the small vehicles was studied.First, from the viewpoint of maximization of energy efficiency, we compared contributions of engine efficiency and transmission efficiency during mode cycle driving and selected automated manual transmission as a suitable transmission for small vehicles. In comparing the hybrid system function, we determined a motor generator connecting shaft and a necessary motor generator output power for attaining both fuel economy and drivability. Further, motor generator and gear arrangement were designed to realize the shift change without torque interruption and shorter axle length than conventional manual transmission.The functional prototype of an automated manual transmission hybrid system and a test vehicle were built. Furthermore, we introduce vehicle evaluation result of the shift change sequence without torque interruption and the possibility of flexible drivability.