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AbstractPurpose -The purpose of this paper is to provide an assessment of the effects of fuel efficiency improvements on four-wheeler ownership, fuel consumption, fuel imports and emissions for personal transportation in the context of India. The paper also aims to measure the rebound effect induced by this policy. Design/methodology/approach -The paper relies on a system dynamics model to analyse the problem. A causal loop model was developed initially, which was transformed to a stock and flow diagram. Simulation was carried out to capture the effects of fuel efficiency improvements in the four-wheeler sector of India. Findings -The study has revealed that a policy of fuel efficiency improvements is favourable to the Indian four-wheeler sector growth, but this policy could result in an increase in fuel consumption and therefore a corresponding increase in the fuel imports and emissions in the country. This policy also induces direct rebound effect that adds up to the already alarming fuel consumption levels.Research limitations/implications -The study is limited to four-wheeler passenger cars in India and gasoline as the transport fuel. Originality/value -The paper offers a system dynamics model that can aid the government, vehicle manufacturers, and environment protection groups to further analyse policies regarding fuel efficiency improvements, fuel price adjustments, four-wheeler ownership, energy consumption and emission, and to obtain some useful policy insights before those policies are implemented.