SMM June 11 News:
On June 10, 2025, four automakers, including FAW Group and Dongfeng Motor, took the lead in pledging to unify their payment terms for suppliers to within 60 days. Subsequently, eight mainstream automakers, including Changan and Geely, followed suit overnight, responding to the "Regulations on Ensuring Payments to Small and Medium-Sized Enterprises" implemented on June 1. Automakers have been taking various measures, such as FAW Group setting "60-day payment" as a rigid requirement, and Dongfeng Motor stating that this is "fulfilling the responsibilities of a central state-owned enterprise."
When multiple automakers announced that they would uniformly compress their payment terms for suppliers to within 60 days, the comment "Will you accept a 12-month acceptance bill?" from a supply chain enterprise circulated widely in the industry, reflecting the complex feelings of suppliers who both anticipate change and fear disappointment.
However, the industry's chronic issues are not easily eliminated. Data from the National Bureau of Statistics (NBS) show that the payment terms in the automotive industry far exceed the average level of industrial enterprises nationwide. Institutions have found that the average payment terms for domestic automakers to suppliers exceed 170 days, with some exceeding 240 days, a significant gap compared to the international standards of 60 days for Tesla and 54.84 days for Toyota. Long payment terms have even become a tool for "cut-throat competition" among automakers, with some enterprises engaging in "price wars" by defaulting on payments and using corporate bills of exchange to extend payment cycles in disguise.
Suppliers' doubts have erupted on social media platforms. Comments such as "Does XX have any credibility? Don't they always delay payments for two to three years?" and "A certain new energy giant has payment terms as long as 270 days" are constantly seen. The highly-liked comment "Will you accept a 12-month acceptance bill?" directly points out that automakers may use commercial bills of exchange to extend payment terms in disguise; "A 20% price reduction with a 60-day acceptance bill" further reveals the hidden rule of "apparently shortening payment terms while secretly driving down prices."
Automakers are shortening payment terms at a time when a new round of price wars is intensifying. Over 30 brands have launched preferential policies, with interest-free and subsidized loans becoming new competitive tools. However, the fierce competition in the front-end market is putting pressure on the back-end supply chain. Industry insiders point out that shortening payment terms will limit the ability of vehicle manufacturers to engage in price wars.
Although the implementation of the 60-day payment term commitment would significantly accelerate suppliers' capital turnover and reshape trust in the supply chain, there are numerous challenges. Shortening payment terms relies on the simplification of internal processes and the application of technology within automakers, and the sustainability of policy supervision is also crucial. As the China Association of Automobile Manufacturers has called for, the healthy development of the industry chain cannot rely solely on numerical games but requires OEMs and suppliers to jointly build a trust ecosystem. As doubts such as "60 days? Isn't that just changing the appearance without altering the substance?" still linger, the success of this industry chain transformation ultimately depends on the automakers' determination to transform and their practical actions.
SMM New Energy Research Team
Wang Cong 021-51666838
Ma Rui 021-51595780
Feng Disheng 021-51666714
Lv Yanlin 021-20707875
