China-based Yanfeng Automotive Trim Systems has signed an agreement with US-based Johnson Controls to form the largest auto interiors company in the world.
AAP reports that the company will be headquartered in Shanghai.
The Milwaukee-based Johnson Controls said in a statement that the joint venture company will manufacture instrument panels, interior systems, door panels and floor consoles and earn $US7.5 billion ($A8.11 billion) in annual sales.
Alex Molinaroli, Johnson Controls' chairman and CEO, said in the statement that the company will be in a good position for sustained growth around the world.
“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,” he said.
"This also aligns with Johnson Controls' corporate commitment to China, which is increasingly becoming a major centre for the global automotive industry."
Yanfeng will have a 70 percent stake in the new company, while Johnson Controls will have a 30 percent stake. The transaction is subject to limited conditions and is expected to close in the first half of next year.
Johnson Controls, which employs 170,000 people, also makes car seats and batteries for hybrid and electric vehicles.