Nowadays global auto industries are going considerable changes in their production lines, which lead to increased competition and shorter product life cycles. Through producing variety products with higher quality and less cost could ensures more customers satisfaction. AU automotive industries especially, car manufacturers are required to increase their market segment with corporate profit to ensure cost related objectives and success over competitors. It is therefore, essential for auto firms to reconsider their product development methodology in order to fulfill the objectives. The focus of this paper is to investigate the pros and cons of the concept of modularity that can be applied in auto industries in order to improve the product development processes. Modularity is gaining increasing importance in manufacturing firms recently; especially in auto industries. Modular product structures ensure real improvements and provide considerable benefits such as; reduce time to market, increase product variants, improve products quality, reduce Bill-Of-Material code etc. for the business firms. However, the concept of modularity has some limitations too. In this paper, a general overview of modularity, its application and prospects in auto industries along with its limitations are also discussed.