Johnson Controls, Yanfeng form world's largest auto parts supplier

• The companies announced the venture company will be named Yanfeng Automotive Interiors.

MILWAUKEE - Johnson Controls Inc. and a subsidiary of China's largest car manufacturer have signed a final agreement to create the world's largest supplier of automotive interior components, one that will be based in Shanghai and have $8.5 billion in annual sales.

Johnson and Yanfeng Automotive Trim Systems Co. Ltd. announced the signing on Tuesday. The venture still needs regulatory approval but the companies expect it to open for business in July.

Yanfeng, a subsidiary of Shanghai Automotive Industry Corp., or SAIC, will have a 70 percent stake in the joint venture, with Johnson Controls' share limited to 30 percent.

The companies announced the venture company will be named Yanfeng Automotive Interiors.

The venture, first announced last year, is part of Glendale, Wis.-based Johnson Controls' move to pare its reliance on the auto industry for sales. The company previously sold off its automotive electronics business, but will remain the leading global supplier of car seats and automotive batteries.

The new company's backlog of future business is expected to reach $10 billion in the next few years, Johnson Controls said.

The combination "will result in an automotive interiors company with unmatched scale, capabilities and reach," said Alex Molinaroli, Johnson Controls chairman and chief executive, in a statement.

The deal means thousands of Johnson Controls employees in the auto interiors business around the world now will report to a corporate headquarters in Shanghai. It also positions those employees to be part of a leading company in the fastest-growing and largest auto market in the world.

Johnson Controls is forecasting its sales in China, which topped $8.5 billion last year, to more than double to over $20 billion by 2019.

The new company will have more than 90 manufacturing, global engineering, development and customer centers in the United States, Europe, China, Japan and India. The product portfolio will include instrument panels and cockpit systems, door panels, floor consoles and overhead consoles.

The agreement is not likely to have any significant effect on Johnson Controls employment in Wisconsin.

The deal was announced as car companies and suppliers prepare to show off new products next week at the annual auto show in Shanghai, and as Johnson Controls prepares to announce quarterly earnings on April 23.

Last week, Johnson Controls announced the sale of its global workplace solutions business, a services business that company leaders said didn't fit with the company's renewed emphasis on manufacturing and sales of heating and cooling equipment and building controls.