During process planning stage in an automotive vehicle development process (VDP), one of the tasks is to select tools such as weldguns and fixtures from large tool libraries and assign them to individual manufacturing operations. Software packages merely pick and validate individual library items to find “a solution.” Further, no design assistance is provided to configure a valid new tool. Currently, in automotive industry, the tool selection process is manual, local, and subjective. It leads to proliferation of tool variants resulting in increased cost and reduced operational flexibility. This paper proposes an approach for automated and optimized selection of tools. In the proposed approach, a tool is characterized in terms of its design parameters. The vehicle geometry is analyzed to identify “solution space,” i.e., the free space quantified in terms of bounds on the tool’s design parameters. The solution space of each manufacturing operation and the design parameters of every tool are used to generate the capability matrix (CM), which shows interoperability of tools. Using CM, tool assignment is formulated as an integer programming (IP) problem. The paper describes the algorithmic details of the proposed approach, for selection of weldguns for spot welding operation in automotive body in white (BIW) assembly shop.