A 60 - day payment term throws cold water on cut - throat competition.

More and more automobile companies have made the commitment that "the payment period shall not exceed 60 days."

On the evening of June 10, GAC Group took the lead in promising on its official WeChat account to shorten the payment period to suppliers to within 60 days. Subsequently, many other automobile companies followed suit.

As of now, a total of 15 automobile companies have promised to control the payment period within 60 days. In addition to GAC Group, they also include FAW Group, Dongfeng Motor, NIO, Li Auto, Xiaomi Auto, Geely Group, BYD Group, Chery Group, Changan Automobile, Seres Group, BAIC Group, SAIC Group, Leapmotor, and Jianghuai Automobile Group.

Among them, SAIC Group and BAIC Group not only promised to pay suppliers within 60 days but also announced that "they will not use settlement methods such as commercial acceptance bills that increase the financial pressure on suppliers."

The so - called commercial bills refer to the situation where, upon the agreed payment date, the automaker does not settle with the supplier in cash but instead issues a commercial bill. The supplier can only cash it upon maturity.

The 60 - day payment period is in response to the "Regulations on Guaranteeing the Payment of Accounts to Small and Medium - sized Enterprises" revised and announced by the State Council in March this year. This document came into effect on June 1. It requires that large enterprises purchasing goods, projects, or services from small and medium - sized enterprises shall pay the accounts within 60 days from the date of delivery.

In addition, the "Regulations" also stipulate the form of payment, prohibiting forcing small and medium - sized enterprises to accept non - cash payment methods such as commercial bills to prevent the disguised extension of the payment cycle.

The intention of these requirements is to relieve the cash - flow pressure on enterprises in the supply chain. However, it is worth noting that the commitment of "the payment period shall not exceed 60 days" may well be just a word game. There are still many details that need to be regulated to cultivate a healthy automobile supply chain.

However, there is reason to believe that since the relevant departments have taken the first step in curbing vicious competition, the gray areas in the supply chain will gradually shrink. Undoubtedly, this puts forward higher requirements for the capital management ability of automobile companies and also accelerates the reshuffle of the automobile industry.

Suppliers Have Suffered from Long Payment Periods for a Long Time

During the era of joint ventures, the payment period for suppliers generally did not exceed three months. A supplier said, "Sometimes, even if we were slow in issuing invoices, the automaker would urge us to do so."

However, in the current extremely competitive industry environment, automobile companies generally regard suppliers as an "interest - free capital pool." Through long payment periods, they shift the financing and cash - flow pressure that should be borne by themselves onto the suppliers.

An institution named Wind once sorted out the data in the 2024 annual reports of major automobile companies. The result showed that currently, the average payment period of domestic automobile companies to suppliers exceeds 170 days, nearly half a year. The payment period of some automobile companies even exceeds 240 days, that is, more than eight months.

This is just the industry average. 36Kr Auto learned that in reality, the payment period of some Tier 1 suppliers is even longer than eight months, possibly up to one year or more.

The payment period of suppliers further upstream in the industrial chain is usually about two months longer than that of the previous - level suppliers. This means that the payment periods of many Tier 2, Tier 3, and even more upstream suppliers will be even longer. For many small and micro - sized supplier enterprises, a payment period of 3 - 6 months is enough to make their financial situation tight and may even lead to their demise.

The commercial bills mentioned in the "Regulations" invisibly extend the payment period of suppliers for some time. Commercial bills are divided into commercial acceptance bills and bank acceptance bills. Commercial acceptance bills are accepted by enterprises, while bank acceptance bills are accepted by banks.

The maturity period of commercial bills is generally 3 - 6 months. Of course, suppliers can choose to cash them in advance, but they need to pay a certain amount of discount interest.

The discount interest of bank acceptance bills is generally 2 - 3 percentage points of the amount, while the discount amount of commercial acceptance bills is higher, possibly reaching 5 - 8 percentage points. An industry insider told 36Kr Auto, "By the end of the year, the discount rate of commercial acceptance bills can even reach 11 percentage points for a six - month term."

For automakers, using commercial bills instead of cash can maintain the good - looking financial statements and relieve their own capital management pressure. However, for suppliers, this form of payment forces them to choose between a longer payment period and losing a part of the payment.

The 60 - Day Payment Period Commitment Is the Beginning of Curbing Excessive Competition

Even though many automobile companies have publicly promised that the payment period will not exceed 60 days, there is much room for manipulation in determining when this "payment period" starts.

A supplier told 36Kr Auto that the calculation method of the payment period varies from enterprise to enterprise and cooperation method to cooperation method.

"Some payment periods are calculated from the date of delivery by the supplier; some start from the day when the automaker completes the acceptance and notifies the supplier to issue an invoice; some begin from the signing of the business contract; and sometimes, the automaker will specify a payment date in the contract, and the payment period starts from that date. Anyway, there are several ways to calculate the payment period."

In addition, in each link of supplier delivery, warehousing, automaker acceptance, and notification to the supplier to issue an invoice, the automaker may find opportunities to extend the payment period.

In the past, suppliers generally delivered goods through logistics. However, now, some automakers, in order to shift the inventory pressure, require suppliers to deliver goods through "pick - up at the supplier's site" or "consignment." The former means that the automaker picks up goods from the supplier every few days; the latter means that the supplier stores parts in a warehouse a few kilometers outside the automaker's factory, and the automaker picks them up every few hours.

This form of delivery not only transfers the inventory management task to the suppliers but also makes the delivery time of suppliers relatively ambiguous. A supplier said, "With this form of delivery, the specific delivery date is determined by the automaker's purchasing department." As a result, there is room for manipulation in determining the start time of the payment period.

He further said that in the warehousing link, "If the goods are stored in a third - party warehouse, it cannot be regarded as part of the automaker's procurement plan and is not within the supervision scope of large enterprises."

Regarding the acceptance and invoicing process, a supplier in Beijing revealed, "Sometimes, we encounter situations where our products have been in the automaker's warehouse for several months, but it doesn't notify us to issue an invoice. Moreover, it may suddenly say that the company has changed products and return our goods."

Not only is the calculation method of the payment period not unified, but many enterprises also did not mention the settlement method when making the commitment. After the 60 - day payment period, suppliers may still only receive a bill that needs to be discounted for cashing.

Perhaps for this reason, after many automobile companies made the 60 - day payment period commitment, suppliers are not optimistic about their future situation. A supplier said bluntly, "How many automakers are there in the world? And how many parts suppliers are there? These commitments are just empty promises."

Anyway, since the relevant departments have issued relevant documents to regulate the payment period for suppliers, it means that the extensive and unsustainable competition mode of excessively squeezing the cash flow of the supply chain will be gradually regulated. Along with this, those automobile brands that have relied on the supply chain in the past will surely move towards extinction at a faster pace.