Urban traffic flow in developing countries is heterogeneous in nature. As a result, it is necessary to convert heterogeneous traffic into a stream of homogenous traffic by using appropriate passenger car equivalents for analyzing mixed traffic. Passenger Car Equivalent (PCE) or Passenger Car Unit (PCU) is used in highway capacity analysis to convert a mixed vehicle flow into an equivalent passenger car flow. Passenger Car Unit (PCU) and saturation flow are among the very important parameters in designing, planning and capacity evaluation of signalized intersections. For the past many years, the Transport Research Laboratory UK (TRL) provided guidelines and parameters for the design of transport facilities based on their research in some countries. PCE value for a vehicle is not a constant value, but it varies with traffic and roadway conditions around; across countries (cities) owing to different traffic composition and vehicle characteristics. Due to these fundamental differences it wouldn’t be appropriate to use western values for pcu and relationships to predict saturation flow. In this study, Passenger Car Unit (PCU) for eight different vehicles have been developed at signalized intersections in Bahir Dar City. Headway Method is a method used to determine the PCU values. Data was collected using a digital video camera at three signalized intersections in the City: Noc, Police commission and Ghion Intersections, and Manual counts were used to collect data from video recordings of each intersection under saturation flow conditions played on a laptop computer. The results showed that the passenger car units of the vehicle classes such as two wheelers, three wheelers, mini buses, small buses, medium buses, small trucks and medium trucks are 0.63,0.82,1.19,1.4.1.67,1.43 and 1.67 respectively. It is also observed that the passenger car unit of a vehicle and the saturation flow of the traffic is highly sensitive to width and traffic composition; all the vehicle class’s PCU are significantly affected by approach width ( which has a positive relationship) when the width of an intersection leg increases the PCU of the vehicle class increases. Two of the vehicle classes (the three wheeled vehicle and medium buses) are additionally affected by the proportion of heavy vehicles. The multiple regression result implies that the saturation flow is also sensitive for width, proportion of three wheelers, proportion of heavy trucks and gradient. The saturation flow of an intersection leg has a positive relationship with the width, proportion of heavy vehicles and gradient & and it is affected negatively by the proportion of three wheelers.