A novel continuum equation has been developed to describe mixed traffic dynamics. By incorporating the principle of vehicle area conservation, a new set of traffic flow variables centered on the concept of vehicle area has been introduced. These variables, namely normalized area flow, and density, exhibit the remarkable characteristic of being conserved across both time and space and seamlessly related to the traditional space mean speed. Next, the study successfully established bi-variate relationships among these newly introduced area-based traffic variables. A comprehensive comparison was conducted with traditional static models, utilizing diverse sets of empirical heterogeneous traffic data to assess the model's fit. Equilibrium states for the newly developed variables were identified using cumulative normalized area-based flow and occupancy time curves. An analysis of the proposed area-based traffic variables suggests that the Smulders-type bivariate relationships may be better suited for mixed traffic conditions. It was also observed that the Rankine-Hugoniot condition is valid for the shock speed calculation with the proposed fundamental diagram. Furthermore, the study proposed fundamental diagrams based on the new parameter following the Manna universality classes. These diagrams provide valuable insights into the behavior of heterogeneous traffic and contribute to enhancing the understanding of traffic flow dynamics in mixed traffic.