With the upcoming regulations for fuel economy and emissions, there is a significant interest among vehicle OEMs and fleet managers in developing computational methodologies to help understand the influence and interactions of various key parameters on Fuel Economy and carbon-di-oxide emissions. The analysis of the vehicle as a complete system enables designers to understand the local and global effects of various technologies that can be employed for fuel economy and emission improvement. In addition, there is a particular interest in not only quantifying the benefit over standard duty-cycles but also for real world driving conditions. This study looks at the impact of exhaust heat recovery system (EHRS) on a small passenger car in the India market with a 1.2L naturally aspirated gasoline engine. CSEG has developed a forward looking Simulink model of the passenger car in order to calculate the engine loading, engine heat rejection and the exhaust energy being generated. Once the model has been calibrated, the model is run for the India Drive Cycle (IDC) and closely integrated with a transient underhood thermal model to evaluate the warm-up impact and the engine friction reduction due to the EHRS system. Vehicle data was recorded for real world driving in and around Pune (India) city. The data was analyzed to establish representative real world drive conditions. Vehicle model with integrated underhood thermal model was simulated to evaluate benefits of EHRS system.