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Computational Fluid Dynamics (CFD) is used extensively in the optimization of modern passenger car to meet the ever growing need of higher fuel economy, better engine and underbody cooling. One of the way to achieve better fuel economy is to reduce the vehicle overall resistance to flow, know as drag. Vehicle drag is a complex phenomenon governed by vehicle styling, component shape, layout and driving velocity and road conditions. To reduce the drag a lot of aero-parts are used these days such as air-dam, skirts, spoiler, undercover, dams etc. However the design of these aero-parts must be optimized to get the desired result as their addition alone does not guarantee improvement in performance. This paper aims at studying the effect of air-dam height and position on vehicle aerodynamics. Also the effect of air-dam addition was verified using fuel economy simulations.