The intervehicular distances between the constituent vehicles are highly significant in deciding the fuel economy of vehicular platoon formations. This paper studies the effect of time-headway, which characterizes the intervehicular distance, on the fuel economy of Heavy Commercial Road Vehicle (HCRV) platoons. The study has been conducted using a complete vehicle dynamics model, making it a realistic approach that could be adopted for planning HCRV platoon formations. A relationship between time-headway and fuel cost has been obtained for HCRV platoons operating at various longitudinal speeds. In addition, the aspect of string stability of the platoon to various speed perturbation signals has also been investigated for various timeheadway magnitudes, considering different road conditions. It has been observed that there lies a minimum magnitude of timeheadway to guarantee string stability, depending upon the speed perturbation and road conditions. This study can hence be viewed as a systematic approach for the selection of time-headway for fuel economic and string stable platoon formations under various operating conditions.