Disclosed in the present invention is a tandem starter-generator construction that includes an induction motor-generator, a permanent magnet motor-generator and power transmission unit disposed adjacent to the motor-generators. The induction motor-generator is utilized predominantly as a motor to provide mechanical power at relatively high efficiency as a motor, and as a generator to provide electrical power during regenerative braking. The permanent magnet motor-generator is used predominantly as a generator for very high efficiency power conversion and to capture additional electrical power during regenerative braking to compensates for the regenerative energy captured at lower efficiency by the induction motor-generator. Accordingly, the tandem motor-generator construction disclosed herein overcomes the drawbacks of low efficiency of an induction motor-generator operating in regenerative mode and a permanent magnet motor-generator magnetic drag losses during periods of non-utilization at high speeds in order to improve fuel efficiency of a parallel hybrid vehicle.