This paper presents a prototype Automatic Guided Vehicle (AGV) equipped with two types of proximity sensors. Although largely modeled as a line-following robot, the algorithm makes reactive decisions based on sensory data to avoid the obstacles by temporaily deviating from the predefined path. The infrared (IR) sensors recognize the desired path of the AGV by detecting the high-contrast line on the surface, thus enabling automated motion of the AGV. The ultrasonic proximity sensors on the AGV aid in the detection of the obstacles or for following moving objects such as another AGV. Different scenarios are discussed where this multisensor capability enables enhanced perception for AGVs without resorting to a computationally more intensive robot vision system.