The automotive industry is the largest industry in the United States in terms of the dollar value of production . U.S. automakers face tremendous pressure from foreign competitors, which have an increasing manufacturing presence in this country. The Big Three North American Original Equipment Manufacturers (OEMs)-General Motors, Ford, and Chrysler-are reacting to declining sales figures and economic strain by working more efficiently and seeking out opportunities to reduce production costs without negatively affecting the production volume or the quality of the product. Successful, cost-effective investment and implementation of the energy efficiency technologies and practices meet the challenge of maintaining the output of high quality product with reduced production costs. Automotive stamping and assembly plants are typically large users of compressed air with annual compressed air utility bills in the range of $2M per year per plant. This paper focuses on practical methods that the authors have researched, analyzed and implemented to improve compressed air system efficiency in automobile manufacturing facilities. It describes typical compressed air systems in automotive stamping and assembly plants, and compares these systems to best practices. The paper then presents a series of examples, organized using the method of inside-out approach, which strategically identifies the energy savings in the compressed air system by first minimizing end-use demand, then minimizing distribution losses, and finally making improvements to primary energy conversion equipment, the air compressor plant.