NIO(US:NIO) Xin Lang Zheng Quan·2025-06-11 04:34Core Viewpoint - Several major Chinese automakers, including FAW, Dongfeng, GAC, and Geely, have collectively decided to shorten supplier payment terms to within 60 days, responding to the revised regulations from the State Council and the initiative from the Automotive Industry Association. This move aims to alleviate the financial pressure on suppliers, who previously faced payment terms averaging over 170 days, with some exceeding 240 days [1][4]. Group 1: Industry Response - The average payment term for domestic automakers was over 170 days, leading to significant financial strain on suppliers who had to bear funding pressures for 6-12 months [1]. - In 2024, the automotive industry's profit margin is projected to be only 3.9%, significantly lower than the average of 6% for downstream industrial enterprises, indicating heightened financial risks within the supply chain [1]. - Notably, companies like NIO, BAIC Blue Valley, and others did not participate in this commitment, highlighting a divide in the industry's response to the initiative [1]. Group 2: Financial Health of Automakers - NIO has the highest debt ratio at 87.45% as of the end of 2024, with accounts payable turnover days reaching 195, far exceeding its previously claimed 30-90 days [2][4]. - NIO's revenue for 2024 is projected at 65.732 billion, with a net loss of 22.658 billion, indicating a worsening financial situation [4]. - The cash and cash equivalents for NIO decreased by 15.75% year-on-year to 27.747 billion by the end of 2024, further dropping to 8.075 billion in the first quarter of 2025, representing a decline of over 70% in just three months [4]. Group 3: Supplier Dynamics - Suppliers are increasingly frustrated with NIO's long payment terms, with some, like the lidar supplier TuDatong, experiencing real payment terms exceeding 90 days, which constitutes 92.4% of their revenue [4]. - Some suppliers are shifting to companies like BYD or Xiaomi, which offer shorter payment terms, indicating a potential loss of trust in NIO's financial practices [5]. - The shift to a 60-day payment term reflects a broader change in the automotive industry's competitive landscape, moving from cost-cutting through supply chain pressure to a more resilient value chain approach [5].