The automaker reached a deal with Procura Auto Parts LLC, which will buy parts inventory from key suppliers and front the cash, GM said in a securities filing on Tuesday. The automaker will pay Procura interest and fees upfront, and pay for the parts when it needs them. The suppliers will store the inventory.
The move comes in response to a series of supply disruptions in recent years that have shut down production at several carmakers. The Covid-19 pandemic and semiconductor shortage that followed highlighted how buying parts for just-in-time delivery can leave assembly plants vulnerable to costly interruptions when even a single component suddenly runs out.
GM did not disclose which parts it will be securing. In the past, the company has lost production due to chip shortages and has moved to ensure supplies of semiconductors as well as rare earth metals.
Procura will get its funding to buy the parts for GM from banks including JPMorgan Chase and Banco Santander SA, the filing said.
Procura will charge GM 1.55% annual interest on top of Secured Overnight Financing Rate, which is currently about 3.6%. GM will also pay an annual fee equivalent to 0.25% of the daily average unutilized portion of the credit facility, according to the filing.