Core Viewpoint - The China Automobile Industry Association (CAAM) has launched an initiative to standardize payment terms for automotive suppliers, establishing a maximum payment period of 60 days from the date of delivery and acceptance of goods by the automaker [1][3]. Group 1: Initiative Details - The payment period starts from the date the supplier's goods are delivered and accepted by the automaker, with a maximum of 60 calendar days [1][3]. - Automakers are encouraged to establish long-term cooperative relationships with suppliers, with contracts having a minimum validity of one year [1]. - The initiative outlines key processes including order confirmation, delivery and acceptance, and payment and settlement [3]. Group 2: Industry Response - 17 automakers have publicly committed to implementing the payment initiative, including major companies like Dongfeng Motor, SAIC Group, and BYD [2][6]. - Automakers such as BYD emphasize the importance of adhering to the initiative to ensure supplier rights and stabilize supply chain expectations [6]. Group 3: Specific Policies from Automakers - Chery Group has introduced a four-pronged approach to standardize payment terms and reduce average payment periods for suppliers [7]. - Changan Automobile has implemented a payment scheme that starts counting from the delivery date, successfully fulfilling the 60-day payment commitment [7]. - Great Wall Motors has committed to using bank transfers and bank acceptance bills exclusively for payments, avoiding electronic vouchers [7].

Core Viewpoint - The automotive industry in China is addressing the long-standing issue of extended payment terms for suppliers, with several major car manufacturers committing to a maximum payment period of 60 days to enhance the efficiency of the supply chain and support small and medium-sized enterprises [2][3]. Group 1: Industry Developments - The 2025 Chongqing International Auto Show featured the launch of 93 new vehicles, highlighting the collaborative efforts needed among suppliers, automakers, and dealers for the high-quality development of the new energy vehicle industry [2]. - Major automotive companies, including China FAW, Dongfeng Motor, and BYD, have pledged to implement a supplier payment term not exceeding 60 days, aiming to improve cash flow for small and medium enterprises [2]. - The Ministry of Industry and Information Technology and the State-owned Assets Supervision and Administration Commission have issued directives to stabilize the supply chain and promote high-quality development in the automotive sector [2][3]. Group 2: Financial Challenges - The accounts receivable turnover days in the automotive parts industry have been on the rise, indicating a growing challenge with long payment cycles for suppliers [3]. - Suppliers in various segments, such as automotive fasteners and electronic components, report facing payment cycles of 6 to 12 months, leading to significant financial strain [3]. - Analysts warn that unresolved long payment terms could hinder the efficiency of fund circulation within the supply chain, particularly affecting small suppliers who may struggle with cash flow and profit margins [3].

Core Viewpoint - Major Chinese automotive companies have collectively committed to standardizing supplier payment terms to a maximum of 60 days, aiming to enhance cash flow efficiency and stabilize the supply chain, in response to the newly implemented regulations for small and medium enterprises [1][2][3][4]. Group 1: Industry Response - Nearly 20 leading automotive companies, including China FAW, Dongfeng Motor, and GAC Group, have publicly announced their commitment to a 60-day payment term for suppliers [1][2][3]. - The new regulation, effective from June 1, mandates that large enterprises must pay small and medium enterprises within 60 days of delivery, addressing long-standing issues of delayed payments in the automotive supply chain [4][5]. - The collective commitment from these companies has led to a notable increase in the A-share automotive parts sector, reflecting positive market sentiment [5][6]. Group 2: Financial Implications - Historically, payment terms for suppliers in the automotive industry have exceeded 120 days, with some companies reporting terms over 200 days, which has strained the financial health of upstream suppliers [5][6]. - The average accounts payable turnover days for major companies like BYD and Geely are reported to be around 127 days, while Great Wall and SAIC exceed 160 days [3][5]. - Experts suggest that the reduction in payment terms could improve cash flow for suppliers, potentially alleviating financial pressures across the entire supply chain [5][6]. Group 3: Future Outlook - The successful implementation of the 60-day payment term will depend on the willingness of dominant automotive companies to foster mutually beneficial relationships with suppliers [7]. - Industry experts believe that if the commitment is genuinely upheld, it could lead to a revitalization of the automotive supply chain, enhancing overall industry confidence [7].