Core Viewpoint - The automotive industry is taking significant steps to combat "involutionary" competition by standardizing payment terms to suppliers, committing to a maximum payment period of 60 days, which is expected to enhance financial stability for small and medium-sized enterprises [1][2][4]. Group 1: Industry Response - Major automotive manufacturers, including China FAW, Dongfeng Motor, and GAC Group, have pledged to limit supplier payment terms to 60 days, with over 17 companies making similar commitments by June 13 [1][3]. - The initiative is seen as a response to the pressures of price wars in the automotive market, which have reduced profit margins from 8% in 2017 to an estimated 4.3% in 2024, and further down to 3.9% in Q1 of this year [3][4]. Group 2: Impact on Supply Chain - The standardization of payment terms is expected to facilitate efficient cash flow for suppliers, particularly small and medium-sized enterprises, and promote collaboration across the supply chain [2][5]. - The automotive industry has been criticized for extending payment periods, which has exacerbated financial pressures on upstream suppliers, such as those in the steel industry [3][6]. Group 3: Regulatory Framework - The recent implementation of the "Payment for Small and Medium Enterprises Regulation" mandates that large enterprises must pay small and medium enterprises within 60 days of delivery, prohibiting the use of commercial bills to extend payment periods [4][6]. - The Ministry of Industry and Information Technology supports the automotive sector's commitment to these payment terms and encourages the establishment of stable partnerships between large and small enterprises [8]. Group 4: Future Considerations - While the commitment to a 60-day payment term is a positive step, there are concerns regarding the actual implementation and the handling of historical payments that exceed this period [5][6]. - Ongoing regulatory efforts aim to address issues of delayed payments and ensure compliance with the new standards, which are crucial for fostering a healthier business environment in the automotive sector [7][8].