Johnson Controls International PLC (NYSE:JCI) has announced that it has formed a strategic partnership with China’s largest e-commerce company JD.Com Inc (ADR) (NASDAQ:JD). The partnership will see Johnson Controls supply leading automotive batteries both automotive retailers and customers in China.
Johnson Controls specializes in creation of smart battery technologies used in almost all type of vehicle and producing one-third of the total output in the industry every year. JD.com, the largest retailer in China by revenue, boasts of the largest fulfillment infrastructure achieved by any Chines ecommerce company. The partnership will create a new delivery system as well as means to supply batteries to aftermarket channels and consumers in China, which is quickly growing and becoming the largest market in the world for automotive batteries. The market is expected to grow to 240 million vehicles on the road by 2020.
Among other things, the new agreement will create a B2C agreement which allows 30-minute express delivery of VARTA batteries. The agreement will open online access to VARTA batteries which customers will have delivered within 30 minutes using express delivery service that is available more than 300 major cities in China. This offering will also include the VARTA AGM battery, which is the leading technology used in many start-stop vehicles, which offers a 5 to 8% improvement in consumption of compared to conventional vehicles.
The deal will also entail an agreement for delivering Energizer® batteries to Chinese aftermarket channels. Energizer® batteries is a well-known automotive battery brand which is produced in China by Johnson Controls Power Solutions. These batteries will be delivered to JD’s sales channels, B2B aftermarket including authorized quick repair factories, garages and workshops, professional repair centers, automotive decoration shops, automotive maintenance plus others offline channels.
There has been growth of online sales for VARTA batteries on JD.com’s B2C auto parts platform since the company launched the online platform in 2014. Currently VARTA is the leading automotive battery brand on the B2C platform and accounts for more than half of the sales. Last year, JD.com launched its own automotive aftermarket division and is able to reach more than 100,000 garages and workshops in China.