This paper is aimed at reducing the costs, maintaining the quality and designing the plant layout that is flexible to meet the customer demand. A number of stations in the after test assembly and after paint assembly are selected for capturing the production process requirements. Then, failure mode and effects analysis of after test assembly is carried out. Layout designs for the after test assembly and after paint assembly are developed using systematic layout planning and are validated using Spaghetti diagrams. With the improved layout, considerable reduction in the distance moved by the operator has resulted in 20 percent cost saving at 80 percent Takt time.