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GM makes $4.5 billion parts deal to bolster supply chain
CNBC • • business
Key Points:
- General Motors has entered a multibillion-dollar purchasing agreement with Procura Auto Parts to secure rare or critical automotive parts and avoid supply chain disruptions.
- Procura will receive funding from a bank syndicate led by JPMorgan Chase and Banco Santander to prepay select suppliers on GM's behalf.
- GM will issue irrevocable payment undertakings (IPUs) to Procura, promising repayment by July 31, 2029, allowing GM to keep inventory costs off its books while securing future parts.
- The agreement involves GM paying interest, premiums on used parts, and fees on unused portions, with prepayments recorded as assets and unsecured debt, excluding these from adjusted automotive free cash flow until inventory is purchased.
- GM has not disclosed which specific parts are targeted, but industry challenges have included semiconductor chips, rare earths, and wire harnesses.
