The auto parts market is in free fall.
The big companies are outselling one another, and the big suppliers are disappearing.
With its $10.2 billion acquisition of Ford, General Motors Inc. G.M. -0.00% and Nissan Motor Co. N6.72% are poised to become the biggest suppliers of auto accessories, with the potential to add up to $30 billion in sales in 2021, according to an estimate from market research firm Autodesk Inc. The combined group of companies would create a new industry leader in the auto parts industry.
GM is poised to be the world’s largest auto parts supplier, and Ford is poised for a huge market expansion.
GM, which makes some of the most popular cars in the world, said Wednesday that it is buying Ford’s parts business for $1.8 billion.
GM said it would keep most of the assets, including factories, suppliers and engineering offices in North America, and would retain about $1 billion in cash.
It will be based in Dearborn, Michigan, where it will maintain a manufacturing facility in Lansing, Michigan.
Ford will retain a facility in Dearfield, Ohio, and will maintain operations in the Ohio city of Toledo, which has become a center for its Jeep and Ram brands.
In addition, Ford will keep a U.S. plant in Oshkosh, Wisconsin, which was used by the automaker’s plant in Toledo for about a decade before being sold to Ford for $250 million in 2011.
The company said it plans to keep some parts factories in Mexico, where production began in 2009, but will continue to invest in manufacturing in the United States.
It said it will invest $1,000 a month to operate its U., U.K., and Australian plants.
Ford is building a plant in Birmingham, Alabama, where some of its engines are made.
It plans to use about 80% of its current workforce, up from the current 80% who work there, as well as some new hires.
Ford also said it was buying parts for its next-generation Lincoln MKZ, a compact SUV that will be available in 2021.
It also said that it plans a new assembly plant in Fremont, California, and an expansion of its U-Matic assembly plant near Louisville, Kentucky.
Ford plans to invest $700 million to open a new facility in San Jose, California.
The automaker also said the new facility will be designed to produce components for its own next-gen Mustang, a midsize SUV.
GM has said it expects to spend more than $1 trillion over the next five years on investments, including $700 billion on a new production facility.
Ford’s purchase of the parts business will increase the automaking company’s total global sales, which currently stand at $15.6 billion.
S., the world leader in auto parts sales, will likely be the biggest market for Ford products in 2021 according to the Autodesck report, which forecasts sales of between $8.5 billion and $9.3 billion, based on the median estimate of analysts from Bloomberg Intelligence.
The report, issued Thursday, assumes a 20% growth rate in the U.M.-based auto parts business.
Ford said it is the world most important auto parts producer.
“We’re going to build a world-class auto parts supply chain, and we’re going do it in a way that’s very efficient and in a cost-effective way,” CEO Bob Lutz said.
Ford has been buying into the U-matic assembly line, which made parts for the Jaguar XKR, and has plans to expand production of the new Lincoln MK5, a small car.
GM and Ford also announced that they will expand the supply chain of their electric-vehicle and hybrid vehicles.
Ford and GM have both recently announced new electric vehicles, including the Bolt electric car, which is expected to go on sale in 2021 and be priced around $35,000.
The companies have said that their products will be delivered to customers by 2019.
Ford shares closed up 1.7% to $41.65 in early trading Wednesday.
GM shares closed down 1.1% to 26 cents in early trade Wednesday.