an exhaust heat recovery system for a vehicle is operable to direct exhaust heat to a vehicle transmission under certain operating conditions . in some embodiments , the ehrs may also direct exhaust heat to a heater for vehicle passenger compartment . preferably , the ehrs is controllable to manage available exhaust heat according to vehicle operating conditions , by prioritizing the heat flow among the engine , the transmission , and the vehicle heater . the ehrs may also operate in a bypass mode during which exhaust heat is not directed to the engine , the transmission or the vehicle heater . a method of managing exhaust heat recovery on a vehicle having an ehrs is also provided .