We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
How Will GM's $4.5B Parts Plan Shield It From Supply Shocks?
Read MoreHide Full Article
Key Takeaways
GM plans to secure up to $4.5 billion of critical parts to protect production from supply disruptions.
Procura will finance supplier inventory, while GM pays interest and fees upfront and buys parts as needed.
The plan addresses risks exposed by past semiconductor shortages, natural disasters and other disruptions.
General Motors Company (GM - Free Report) has introduced a plan to secure up to $4.5 billion worth of critical automotive parts to protect its production operations from potential supply disruptions stemming from extreme weather, natural disasters, cyberattacks and other unforeseen events.
Under an agreement, Procura Auto Parts LLC will purchase and finance parts inventory from General Motors’ key suppliers, per a GM securities filing. GM will pay Procura the applicable interest and fees upfront and purchase the parts as needed, while suppliers will retain the inventory in storage.
The initiative follows several supply-chain disruptions in recent years that have forced automakers to halt or reduce production. The COVID-19 pandemic and subsequent semiconductor shortage exposed the vulnerabilities of just-in-time inventory systems, where a shortage of even one component can lead to costly production stoppages.
General Motors did not specify which parts will be covered by the arrangement. However, the automaker has previously experienced production losses due to semiconductor shortages and has taken steps to secure supplies of chips and rare-earth materials.
Procura will finance the purchases through banks, including JPMorgan Chase and Banco Santander. General Motors will pay Procura annual interest of 1.55% plus the Secured Overnight Financing Rate, currently around 3.6%, plus an annual fee equal to 0.25% of the average unused portion of the credit facility. GM carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Supply Disruption Faced by Other Automakers
Ford Motor Company’s (F - Free Report) aluminum supplier, Novelis, faced three fires at its Oswego, New York facility in 2025, damaging the hot mill used to produce wide, thin aluminum sheets for automotive body panels. The resulting supply disruption continues to weigh on Ford’s higher-margin F-Series and Ford Pro volumes. Ford incurred approximately $800 million in temporary Novelis-related costs during the first half of 2026 and expects the full-year impact to reach around $1.5 billion. While the hot mill restart remains on schedule and contingency material has been secured, the recovery is expected to be largely concentrated in the second half of the year.
Rivian Automotive, Inc. (RIVN - Free Report) remains vulnerable to global supply-chain and trade costs despite U.S. vehicle production. Rising raw material, memory and logistics costs are expected to dent Rivian's profits. Macro and geopolitical complexity add to the concerns. These headwinds could erode Rivian's benefits from production efficiencies as R2 scales and keep profitability dependent on procurement and supply-chain execution.
GM’s Price Performance, Valuation and Estimates
General Motors has outperformed the Zacks Automotive-Domestic industry in the last six months. Its shares have gained 10.2% against the industry’s decline of 15.4%.
Image Source: Zacks Investment Research
From a valuation perspective, GM appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.42, lower than the industry’s 3.08.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for GM’s 2026 and 2027 EPS has moved up 2 cents and 8 cents, respectively, in the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
How Will GM's $4.5B Parts Plan Shield It From Supply Shocks?
Key Takeaways
General Motors Company (GM - Free Report) has introduced a plan to secure up to $4.5 billion worth of critical automotive parts to protect its production operations from potential supply disruptions stemming from extreme weather, natural disasters, cyberattacks and other unforeseen events.
Under an agreement, Procura Auto Parts LLC will purchase and finance parts inventory from General Motors’ key suppliers, per a GM securities filing. GM will pay Procura the applicable interest and fees upfront and purchase the parts as needed, while suppliers will retain the inventory in storage.
The initiative follows several supply-chain disruptions in recent years that have forced automakers to halt or reduce production. The COVID-19 pandemic and subsequent semiconductor shortage exposed the vulnerabilities of just-in-time inventory systems, where a shortage of even one component can lead to costly production stoppages.
General Motors did not specify which parts will be covered by the arrangement. However, the automaker has previously experienced production losses due to semiconductor shortages and has taken steps to secure supplies of chips and rare-earth materials.
Procura will finance the purchases through banks, including JPMorgan Chase and Banco Santander. General Motors will pay Procura annual interest of 1.55% plus the Secured Overnight Financing Rate, currently around 3.6%, plus an annual fee equal to 0.25% of the average unused portion of the credit facility. GM carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Supply Disruption Faced by Other Automakers
Ford Motor Company’s (F - Free Report) aluminum supplier, Novelis, faced three fires at its Oswego, New York facility in 2025, damaging the hot mill used to produce wide, thin aluminum sheets for automotive body panels. The resulting supply disruption continues to weigh on Ford’s higher-margin F-Series and Ford Pro volumes. Ford incurred approximately $800 million in temporary Novelis-related costs during the first half of 2026 and expects the full-year impact to reach around $1.5 billion. While the hot mill restart remains on schedule and contingency material has been secured, the recovery is expected to be largely concentrated in the second half of the year.
Rivian Automotive, Inc. (RIVN - Free Report) remains vulnerable to global supply-chain and trade costs despite U.S. vehicle production. Rising raw material, memory and logistics costs are expected to dent Rivian's profits. Macro and geopolitical complexity add to the concerns. These headwinds could erode Rivian's benefits from production efficiencies as R2 scales and keep profitability dependent on procurement and supply-chain execution.
GM’s Price Performance, Valuation and Estimates
General Motors has outperformed the Zacks Automotive-Domestic industry in the last six months. Its shares have gained 10.2% against the industry’s decline of 15.4%.
Image Source: Zacks Investment Research
From a valuation perspective, GM appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.42, lower than the industry’s 3.08.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for GM’s 2026 and 2027 EPS has moved up 2 cents and 8 cents, respectively, in the past seven days.
Image Source: Zacks Investment Research