Fuel economy, performance and drivability are the three important parameters for evaluating the vehicle performance. Powertrain matching plays a major role in meeting the above targets. Fuel economy is estimated based on city, highway and some user defined driving cycles which can be considered as real world usage pattern. Performance and Drivability is evaluated based on the in-gear, thru-gear (acceleration performance) and grade-ability performance. The load collective points of the engine will greatly influence the engine’s performance, fuel economy and emissions which in-turn depends on the N/V ratio of the vehicle. The optimal selection of gear ratios and final drive ratios plays a key role in optimization of the powertrain for a particular vehicle. The current study involves dynamic simulation of the vehicle performance and emissions at transient engine test-bed level for different final drive ratios using AVL DynoExcat. Based on the experimental results from engine test-bed; subjective and objective evaluation of the vehicle has been performed at vehicle level for selected final drive ratios. The objective evaluation includes real world and MIDC fuel economy, gear utilization analysis .Finally a methodological process has been established for the selection of final drive ratio and understanding its interaction with vehicle performance and fuel economy. Keywords: Drivability, Powertrain matching, N/V ratio (N – Engine Speed, V –Vehicle Speed), In-Gear performance, Thru-gear performance, Grade-ability, MIDC (Modified Indian Driving Cycle).