Eddy　current　retarder　for　vehicle　generates　a　large　number　of　heats　when　it　works　continuously,　and　it　leads　to　serious　decline　in　braking　torque.　This　paper　proposes　a　novel　permanent　magnet　retarder　(PMR)　for　vehicle,　whose　cooling　system　is　connecting　with　engine　cooling-water.　A　3-dimensional　finite　element　model　is　developed　to　model　the　electromagnetic　behavior　of　permanent　magnet　retarder　under　constant　speed　operation.　Magnetic　field　and　eddy　current　field　in　PMR　are　numerically　solved　by　finite　element　method.　By　accounting　for　non-linear　permeability　of　rotor　and　weaken　effect　in　magnetic　field　generated　by　eddy　current　magnetic　field,　the　calculation　accuracy　of　air-gap　magnetic　field　is　enhanced.　Experiment　shows　that　temperature　of　retarder　is　below　150°C,　and　the　braking　torque　keep　hard　characteristic　curve.　The　calculated　air-gap　magnetic　flux　density　is　fairly　good　agreement　with　measured　one.