Hybrid electric vehicles are widely seen as potential solutions to the problems of exhaust emissions, fuel consumption and technical challenges to increase vehicle functionality. The present paper focuses on the design, development and performance evaluation of a parallel hybrid electric vehicle based on the concept of a new parallel hybrid transmission. A light pickup diesel vehicle is selected as a platform for hybridization because this category of vehicles consumes a lot of fuel. A prototype of the new transmission system comprised of a coupled planetary gear set, clutches and brakes is built. This transmission utilizes two planetary gear trains coupled for multispeed capability and, has the ability to operate two power sources and to control such power sources independently from one another. To demonstrate the practical applicability of the transmission and this hybrid configuration, one prototype vehicle is built integrating the new transmission system. Since lead acid batteries are available in Indian market, so these batteries are considered in the development. The prototype vehicle is tested on a chassis dynamometer and on test tracks. The acceleration performance of the hybrid vehicle is improved by about 25% over that of the baseline vehicle. An improvement of about 21% in the fuel economy of the hybrid vehicle is measured. The greenhouse gas emissions from the hybrid vehicle are reduced in proportion to fuel consumption. It is a fail-safe design. The new transmission system is proved to be a viable option for parallel hybrid electric vehicles in light duty applications.