Core Viewpoint - The article discusses the implications of the "60-day payment term" initiative in the automotive industry, highlighting the complexities and potential challenges it poses for both car manufacturers and suppliers [3][6][18]. Group 1: Payment Terms and Challenges - The "60-day payment term" is not straightforward, as it can vary based on different interpretations of the timeline from delivery to payment [5][6]. - The actual payment cycle for suppliers can be significantly longer than the reported figures in financial statements due to various internal processes within car manufacturers [8][10]. - The article illustrates a hypothetical scenario where a supplier experiences an 8-month payment cycle despite the manufacturer reporting a 60-day term, emphasizing the disconnect between financial reporting and real cash flow [8][18]. Group 2: Financial Implications for Car Manufacturers - Strict adherence to the 60-day payment term could lead to cash flow issues for many car manufacturers, potentially resulting in bankruptcy if their cash reserves do not exceed their payables [18][19]. - The article notes that companies like Tesla and GAC Group are currently in a safer position regarding cash flow, while others may face significant challenges if the new payment terms are enforced [19][20]. Group 3: Emergence of Supply Chain Finance - The rise of supply chain finance companies is partly a result of government policies encouraging such innovations to enhance liquidity for upstream suppliers [22][23]. - Many leading automotive companies have established their own supply chain finance platforms, which allow them to manage cash flow more effectively while extending payment terms to suppliers [24][26]. Group 4: Industry Dynamics and Competition - The increasing length of payment terms is attributed to heightened competition in the automotive industry, where manufacturers are under pressure to maintain market share amidst a growing number of competitors [40][44]. - The article suggests that the current market dynamics may lead to a consolidation phase, where only the strongest players survive, further impacting supplier relationships and payment practices [44][45]. Group 5: Case Study of BYD - BYD's rapid expansion in production and sales has been facilitated by its ability to extend payment terms to suppliers while simultaneously shortening its inventory and receivables turnover days [28][33]. - The financial strategy employed by BYD highlights the importance of managing cash flow effectively in a competitive environment, where the timing of payments can significantly impact operational efficiency [32][38].