Knowledge Management (KM) is attracting considerable attention as many organizations realize that they compete in a knowledge economy. Therefore, a key source of sustainable competitive advantage relies on managing knowledge. The vast majority of the existing frameworks in KM efforts focus on knowledge processes that takes place during the so-called ¿knowledge life-cycle¿ (KLC). Companies that want to develop and use knowledge most effectively and profitably should begin to treat it differently according to the stages of the knowledge life-cycle. The purpose of this project work is to compare main concepts of the knowledge life cycle and to introduce a possibility of analyzing knowledge flow in practice, particularly in the automotive industry. KM is the development of tools, processes, systems, structures and cultures explicitly to improve the creation, sharing and use of knowledge critical for decision making. Most no standard KM application framework could be established in the literature for industry practitioners in automotive component manufacturers. The aim of this project work is therefore to develop a framework for the application of KM in automotive industry.