GM inks up to $4.5B parts deal to shield against supply chain shocks

General Motors has struck an unusual multibillion-dollar parts purchasing agreement aimed at preserving cash and avoiding the kind of supply chain disruptions that have rattled the global auto industry over the past several years.

5 billion, involves a company called Procura Auto Parts, which specializes in sourcing rare or critical components. Procura will receive funding from a bank syndicate led by JPMorgan Chase and Banco Santander, allowing it to prepay select suppliers on GM's behalf.

In return, GM will issue formal promises, known as IPUs, to repay the company after the parts are used in production, with a deadline of no later than July 31, 2029. The arrangement lets GM keep inventory costs off its books while better securing future parts.

The filing shows GM pays interest, an agreed premium on parts actually used, and a customary annual fee on any unused portion during the year. For accounting, the prepayments appear as an asset, each purchase is booked as unsecured debt, and cash flows are treated as if GM paid suppliers directly.

These payments are excluded from adjusted automotive free cash flow until GM buys the inventory, which the company typically does within 90 days of purchase.

GM declined to say which parts the deal targets. Historically problematic components for the industry have included semiconductor chips, such as dynamic random access memory, rare earths, and wire harnesses. S. tariffs and a push to reduce reliance on Chinese companies.

The deal with Procura and the banks was finalized on Friday, per the filing.