Johnson Controls, the global technology major, and Yanfeng Automotive Trim Systems, a wholly owned subsidiary of Huayu Automotive Systems Co (HASCO), the component group of Shanghai Automotive Industry Corporation (SAIC), China’s largest state-owned automaker, have signed a pact to form a global automotive interiors joint venture.

The agreement is a noncash transaction comprised of asset contributions by the two parties that will create the largest automotive interiors company in the world with revenues of approximately $7.5 billion (Rs 44,610 crore). Yanfeng will hold the majority 70 percent share in the joint venture, and Johnson Controls will have a 30 percent share.

In a statement issued yesterday, Alex Molinaroli, Johnson Controls chairman and CEO, said: "Joining our two interiors businesses is a natural extension of our already very successful existing partnership with Yanfeng in automotive seating, which has flourished over the past 15 years. It creates a strong combined company with a market leading position and a foundation for sustained global growth. This also aligns with Johnson Controls' corporate commitment to China, which is increasingly becoming a major centre for the global automotive industry."

The new company will be headquartered in Shanghai with global engineering, development and customer centres in the United States, Europe, China, Japan and India. The product portfolio will include instrument panels and cockpit systems, door panels and floor consoles.

The agreement excludes certain facilities in both Yanfeng and Johnson Controls' existing networks.

Photograph: Johnson Controls CEO Alex Molinaroli (left) signs the JV agreement with Yanfeng chairman Shen Jianhua to set up a $7.5 billion JV to manufacture automotive interior components.