Internet of Things (IoT) is a rapidly growing field with applications in many industries. Yet, companies still experience difficulties in selecting and developing effective and efficient IoT solutions that add value. This study provides a case within the automotive industry, i.e. an automotive parts manufacturer, called APM. In this case, we highlight the need for an efficient IoT solution for APM and we suggest that a systematic and collaborative approach, called action design research (ADR), is used for selecting, co-developing, implementing and testing an IoT solution. Although APM experimented with an IoT solution before, the solution was inadequate and failed to address the efficiency problems. As the main contribution, we present a collaborative IoT design approach (CIOTDA) to guide practitioners in developing and implementing IoT solutions. In addition, we provide experimental results for a partial implementation of CIOTDA. The availability recorded by the sensors was an average of 3.7% lower than the availability from the log sheets, where the largest difference was 7.6%. The total number of parts produced was mostly consistent except for one cell that logged 90 parts produced while the sensor only recorded 51 parts.