General Motors has reached a multibillion-dollar parts deal designed to prevent supply chain disruptions and preserve cash, the automaker disclosed in a public filing Tuesday. The arrangement, reported by CNBC, is worth up to $4.5 billion and involves a company called Procura Auto Parts, which specializes in sourcing rare or critical components.
The deal is funded through a bank syndicate led by JPMorgan Chase and Banco Santander. Procura will use that funding to prepay select suppliers on GM's behalf. In return, GM will issue formal promises called irrevocable payment undertakings, or IPUs, committing to repay the company after it uses the parts in production, no later than July 31, 2029.
The structure allows GM to keep inventory costs off its books while still securing future supply. GM pays interest plus an agreed-upon premium on what it uses, as well as a customary annual fee on any unused portion during a given year, according to the filing. For accounting purposes, the prepayments appear as an asset and each purchase is booked as unsecured debt. Cash flows are shown as if GM paid suppliers directly.
These payments are excluded from adjusted automotive free cash flow until GM actually buys the inventory. The company typically books the capital within 90 days of purchase. GM declined to disclose which specific parts the arrangement targets. Parts that have caused problems across the automotive industry in recent years include semiconductor chips such as dynamic random access memory, rare earths, and wire harnesses.
The deal was established with Procura and the banks on Friday, according to the filing. It follows years of global automotive supply chain disruptions and comes after GM and other automakers reevaluated their sourcing in response to U.S. tariffs and a broader push to move away from Chinese suppliers.
The agreement reflects a wider shift in how automakers are managing parts risk after shortages during the early part of this decade forced production shutdowns across the industry. By prepaying through a third party, GM can lock in supply without taking on the full balance sheet impact of holding large inventories.
