With the popularization of easy driving in Japan, the quest to improve the fuel economy and vehicle performance of a small car with a torque converter automatic transmission (AT) has led to the development of the Electro Continuously Variable Transmission (ECVT). The Subaru ECVT which combines an electronically controlled magnetic powder clutch with the van Doorne's steel belt drive system employs a couple of conventional synchromeshes as a means of forward/reverse change-over mechanism and simple hydraulic control valves. This combination has realized smoothness and quick response of CVT operation and provides a compact size for the CVT with the weight of 45.4 kg. Fuel economy of Subaru Justy ECVT car with the one liter engine is thus improved by 15 to 20 % in Japanese 10-mode test cycle and at the 60 km/H constant speed respectively in comparison with that of three speeds torque converter AT. The description of the transmission and its control strategy including the powder clutch are presented.