This paper describes the operating principle and the performance analysis of the surface-permanent-magnet-type vernier motor with concentrated windings using finite element method analysis. To satisfy the structural relationship of Z2=Z1±p , the number of auxiliary teeth in the stator, pole pairs in the rotor and winding pole pairs are chosen as Z1=12, Z2=11 and p=1 respectively. With this setup which operates at a gear ratio of 1/11, the cogging torque tends to be lower and therefore the output torque contains only smaller ripples. The iron loss computation and the efficiency calculation employing the two-frequency method are also investigated. Estimation of the iron loss has clarified that the hysteresis loss was dominant in the laminated core and that the magnet eddy current loss increased dramatically at higher speeds due to the rotating magnetic field.