Walmart plans to increase its auto sales through the sale of its new Auto Parts franchise by $500 million, a deal that has drawn criticism from auto executives who fear that the retail giant is taking advantage of an industry already struggling to recover from the recession.
The acquisition of the chain from the rival Home Depot is expected to be completed by the end of this year, and Walmart plans on making $5 billion in additional sales this year alone.
Auto parts, the group said in a statement Tuesday, will have the added benefit of “creating a more efficient and efficient automotive supply chain.”
The deal will include a new headquarters and a new customer base.
Walmart is not the only big-name retailer to have entered the auto parts business.
General Motors announced in April it was acquiring the parts giant Advanced Auto Parts, and General Motors is expected in the coming months to acquire parts maker PTC Automotive.
The merger of the two companies, which together produce over 70 percent of the auto-parts market, is expected create as much as 4 million new jobs.
Walmart CEO Doug McMillon told investors that the deal would help Walmart grow and create new business for itself.
“The Auto Parts deal will help us create more jobs in the auto business, better position our suppliers to provide better quality, and provide better value for our customers,” he said.
“We are going to create tens of thousands of new jobs, and we’re going to provide them with better products and service, and be more competitive with our competitors.”
Auto Parts was created in 2003 by Walmart’s founder and CEO, Dov Charney, and is one of the few remaining privately owned companies that make auto parts.
Walmart’s acquisition of Advanced AutoParts will also allow Walmart to expand into new markets.
It will provide customers with better access to suppliers, and better quality parts, and help make Walmart more competitive in the marketplace.
“Today, Walmart continues to be the leading supplier in our marketplace,” said Jeff Dunn, executive vice president of retail at Walmart, in a news release.
“With this acquisition, we’re able to expand our reach into more of the country and to make our supply chain even better.”
The combined companies will have about 1,600 employees in the U.S., with a goal to employ 100,000 people by 2020.