Internal and external defects of an inner pulley for automobile air conditioner are investigated in this study. Inner pulley is a part of compressor clutch assembly of automobile air conditioner. In cold forging of inner pulley, the design requirement are to keep the same height of the inner rib and outer one and to make uniform distribution of hardness in the forged product. At the end of the forging of inner pulley, the piping defect as an external defect begins to form at the back center of the billet. The internal crack as an internal defect also occur at the adiabatic shear band which usually has maximum ductile fracture value. It is important to predict when the internal and external defects occur during the deformation process, in order to minimize the amount of discard that is generated. The finite element simulations are applied to analyze the defects. The validity of the computational results are examined by experiments. These computational results are in good agreement with the experimental ones.