NEW YORK—General Motors has established a parts financing agreement worth up to $4.5 billion, aimed at securing its supply chain and keeping inventory costs off its balance sheet. The company disclosed the arrangement in a public filing Tuesday.
At the center of the deal is Procura Auto Parts, a firm specializing in sourcing rare or critical automotive components. Procura will receive capital through a bank syndicate led by JPMorgan Chase and Banco Santander.
Under the terms, Procura will use that funding to prepay selected suppliers on GM's behalf, securing availability of essential parts well ahead of production needs. In exchange, GM will issue Irrevocable Payment Undertakings—binding commitments to reimburse Procura after it uses the parts in manufacturing, with a final repayment deadline of July 31, 2029.
The structure gives GM a meaningful balance sheet advantage: inventory expenses stay off its books until it formally purchases the parts from Procura. GM will pay interest on the portion of the facility Procura draws for prepayments, an agreed-upon premium on the value of parts ultimately purchased and a customary annual fee on the unused portion of the facility.
From an accounting standpoint, Procura's prepayments are recorded as an asset on GM's books. Each specific parts purchase through the facility is booked as unsecured debt, and the associated cash flows are presented as if GM had paid suppliers directly.
Payments made under the facility are excluded from GM's adjusted automotive free cash flow until the company formally buys the inventory from Procura—typically within 90 days of the actual purchase.
The deal comes as automakers have overhauled global sourcing strategies following years of component shortages, including acute scarcity of semiconductor chips, particularly dynamic random access memory, rare earth materials and wire harnesses. That reassessment accelerated after U.S. tariffs and a push to reduce dependence on Chinese suppliers.
The agreement with Procura and the banking partners was formally established Friday, preceding its public disclosure. GM shares closed Tuesday at $47.30, up 0.2 percent.
