The tolerance study is one of the most critical and neglected issues in sheet metal assembly manufacturing research. The fundamental shortcoming of currently existing tolerancing methods is the lack of physical significance of the model. This paper presents a new tolerance analysis methodology for sheet metal assembly based on physical/functional modeling of the fabrication error using the developed beam-based model. The modeling method includes principles of decoupling automotive parts into beam members, modeling of beam-to-beam joint geometry, and identification of part locating points. Tolerance analysis is conducted in three steps: (1) input of part and assembly tooling variability based on the statistical distribution; (2) calculation of accumulated tolerances for key process characteristics using statistical models; and (3) calculation of resultant tolerances based on the flexible beam-based model.