Vehicle behaviour of three vehicles was investigated for a number of typical driving cycles, these being representative of traffic found both in Australia and overseas. The vehicles assessed include two sedans, one with an automatic transmission and the other a manual gearbox, these having been instrumented and tested previously by McConachie (1981) and Vint (1981). Vehicle size and engine capacity are, by international standards, characteristic of an average to large family car. The third vehicle tested, a public transport bus, was monitored both before and after an innovative Regenerative Braking, Storage and Propulsion System had been designed and fitted. A modified car chase-technique was used for the two passenger vehicles to ensure each vehicle typifies the traffic flow for each cycle. A probabilistic approach was then used to develop a method of assessing vehicle and engine behaviour, traffic compatibility and performance requirements for vehicles that travel on these routes. The commercially operated transit bus operated over predefined bus routes following an established operating schedule. The bus's low performance capability and requirement for regular stopping provided additional traffic compatibility and performance criteria. Methods of improving fuel efficiency of transport vehicles were investigated with particular attention being paid to energy lost through the application of brakes or retarders. A Regenerative Braking System for transit buses appeared feasible, leading to a computer aided engineering approach to the development and testing of a prototype system. Digital simulations were used to theoretically determine an optimum solution by modelling various system configurations. Plausible combinations of components within each system were fine tuned by assessing the effect of changing individual component sizes. In this manner designs ideally suited for the operating conditions in Brisbane were analysed in minimal time without requiring considerable capital expenditure. Computer-aided-design (CAD) has been used to assist both mechanical and hydraulic design of the prototype system. Besides providing a drafting facility CAD was employed as a versatile engineering tool by providing full 3 -dimensional modelling including surface definition and shaded image picture generation. Detailed design drawings were produced from which the hydraulic regenerative braking system was constructed and installed into a Brisbane City Council Leyland Panther bus. A digital control system was also designed and developed for the prototype system which provided considerable flexibility for optimising the control logic for both system efficiency and driver/passenger acceptance. Various control algorithms were tested and fine tuned both before and after the modified bus began operation in service carrying passengers. The system was critically assessed by monitoring and analysing its operation under true stochastic conditions. The results were used to determine the accuracy of the simulation package as well as the effect the system has to improving traffic compatibility. The benefits of improved traffic flow as a direct result of the installed Regenerative Braking System have been examined.