Core Insights - The automotive industry in China is making progress in addressing payment terms, with major companies committing to pay suppliers within 60 days, as highlighted by the China Automotive Industry Association's initiative [1][4][8] - A review of the third-quarter reports of A-share listed automotive companies shows a general reduction in accounts payable turnover days, indicating improvements in payment practices [2][3] Payment Terms Improvement - The average accounts payable turnover days for 11 selected A-share listed passenger car companies decreased, with GAC Group having the shortest at 76.14 days and Qianli Technology the longest at 154.61 days [2] - Notable reductions in turnover days include Beiqi Blue Valley, which decreased from 112.32 days to 83.79 days, a drop of 28.53 days or 25% [2] - Despite improvements, some companies still face challenges with historical accounts payable, such as SAIC Group, which reported 76.9 billion yuan in outstanding notes payable [2][3] Cash Flow Status - Most automotive companies maintained positive cash flow in the third quarter, with SAIC Group, Great Wall Motors, and Changan Automobile each exceeding 10 billion yuan in operating net cash flow [3] - However, some companies are experiencing cash flow pressures, indicating a mixed financial health across the industry [3][7] Best Practices Among Leading Companies - GAC Group has consistently maintained a supplier payment period of under 60 days, utilizing a digital management system to streamline processes from order issuance to payment [5] - Seres has innovated with a "factory within a factory" model, enhancing efficiency and reducing costs by integrating supplier production lines directly into its facilities [6] - China FAW has implemented a 100% cash payment policy for small and medium-sized suppliers, moving away from mixed payment methods [6] Ongoing Challenges - Despite improvements, operational bottlenecks remain, particularly with legacy orders that do not meet the new payment terms, leading to discrepancies in treatment between new and old contracts [7][8] - Suppliers express concerns about potential repercussions for complaints, leading them to prefer negotiation over formal disputes [7] - The industry faces pressure to optimize cash flow management as companies adjust to the new payment terms, which may strain their liquidity [8]