The programmable logic controller (PLC) based and magnetic tape guided automatic guided vehicles were designed and implemented in a production environment where significant material handling is involved. The work is focused on transporting the components of transmission plant of a small car from the machining line (consisting of multitude of machine tools) to the assembly line. The new automated material handling system was designed to replace the existing manual material handling system. The PLC controller deals with the movement of the vehicle in forward and reverse path with the use of four different sensors. Magnetic tape-based guiding lines that are relatively inexpensive, and less-complex are implemented for the movement of automated guided vehicle (AGV) in a specified path. Infrared sensor system is integrated to the AGV for effective obstacle detection during the material movement. Auto-charging of the batteries of the AGV without needing them to halt specifically for charging is implemented. The results showed that lithium-ion batteries are more suitable compared to the led-acid batteries for the present type of AGVs and their charging strategy. The overall AGV system showed promise and proved to be more productive and reliable compared to the previously existing manual material handling system. Copyright © 2020 Inderscience Enterprises Ltd.