In a major consolidation of auto parts suppliers, Fiat Chrysler has agreed to sell its Magneti Marelli business to a company owned by private-equity giant KKR for 6.2 billion euros ($7.1 billion).

Magneti makes headlights and electronic components among other parts while KKR-owned Calsonic Kansei, which is based in Japan, specializes in heating and air conditioning systems and components for Nissan’s electric vehicles.

The combined company will have 15.2 billion euros in annual revenue, positioning it to compete with such auto parts leaders as Robert Bosch Denso Corp., and Magna International.

“Our industry has gone through fierce change in recent years and the phase to come will be even more dynamic,” Calsonic CEO Beda Bolzenius said in a news release. “It is exciting to form a strong platform for Calsonic Kansei and Magneti Marelli to work together and create a competitive automotive supplier which is extremely well placed among the global Top Ten.”

As The Financial Times reports, “The automotive industry is facing structural changes, with the advent of electric and self-driving technologies threatening the traditional business models of both carmakers and their suppliers.”

“The component industry has already seen several major moves, with Delphi splitting its business and Continental making preparations to do the same,” the FT added.

The Wall Street Journal said the larger auto parts suppliers have a competitive edge since they “are better able to funnel research dollars into next-generation technologies, such as self-driving and internet-connected vehicles.”

Bosch had sales of 78.1 billion euros in 2017 and spent 7.2 billion euros on research and development.

Fiat, which has been trimming its portfolio of businesses, had originally planned to spin off Magneti but reportedly received approaches by bidders including Apollo Global Management, Bain Capital, and India’s Mahindra.

KKR “was always the frontrunner” for Magneti, according to the FT. The firm purchased Calsonic from Nissan and other shareholders in 2016.

“This is a transformational day for both Magneti Marelli and Calsonic Kansei, creating as it does a global business of exceptional range, reach, expertise and future prospects,” Magneti CEO Ermanno Ferrari said.

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