Automated Guided Vehicle (AGV) is commonly used in manufacturing plant, warehouse, distribution center, and terminal. AGV is self-driven vehicle used to transport material between workstations in the shop floor without the help of an operator, and AGV includes a material transfer system located on the top and driving system at the bottom to move the vehicle as desired. For navigation, AGV mostly uses lane paths, signal paths or signal beacons. Various predominant sensors are also used in the AGV. However, in the conventional AGV, there is a problem of not turning or damaging nearby objects or AGV in a narrow space. In this paper, a new driving system is proposed to move the vehicle in a narrow space. In the proposed driving system, two sets of the combined steering-drive unit are adopted to solve the above problem. A prototype of AGV with the new driving system is developed for the comparative analysis with the conventional AGV. In addition, the experimental result shows the improved performance of the new driving system in the maximum speed, braking distance and positioning precision tests.