The competitive climate of production and high labour cost, motivate western companies to use technologies like automation as a mean to increase manufacturing competitiveness. On the other hand companies are aware about cost reductive policies like lean production which has shown noticeable achievement, consequently some manufacturers tend to follow such system. In this situation, in order to have lean enterprise, it is vital to find a clear picture of challenges and potentials of implementing automation within a lean environment. So, finding the right level and type of automation becomes vital for companies, and achieving this is not possible without a lean development of automation. The paper presents an overview of automation development from a lean perspective. The focus is on manufacturing and a case study in the automotive industry is presented. Challenges and potentials of automation are pinpointed and some suggestions regarding automation development is given.