China Automakers Lag on Supplier Payment Pledge Amid Price War

China's major automakers, including China FAW Group, Guangzhou Automobile Group, and Seres Group, have met a pledge to pay suppliers within 60 days. However, other automakers, including Dongfeng Motor Group and EV startups Li Auto and Xpeng, are working to reach the benchmark. The government has stepped up scrutiny of the auto sector and has held seminars to discuss fund-raising needs.

China's major automakers are facing challenges in meeting a government pledge to pay suppliers within 60 days, highlighting ongoing cash flow issues and business practice overhauls prompted by a long-running price war. According to a report by state broadcaster CCTV, only three of China's major automakers—China FAW Group Co., Guangzhou Automobile Group Co., and Chongqing-based Seres Group Co.—have implemented a 60-day turnaround for their bills, while other automakers, including state-owned enterprises and EV startups, are working to reach the benchmark [1].

The Ministry of Industry and Information Technology, which regulates the auto sector, has called on the three companies to serve as an example for others. The government has stepped up scrutiny of what it calls unhealthy competition in the auto sector, with extended payment cycles for suppliers stretching over 100 days in some cases. In early June, 17 manufacturers pledged to keep the payment turnaround within 60 days [1].

New contracts are expected to comply with the 60-day pledge, while outstanding ones will gradually be resolved. The National Association of Financial Market Institutional Investors held a seminar in June with executives from companies including BYD Co., Xiaomi Corp., and Xpeng to discuss how to meet the fund-raising needs of the industry [1].

Xpeng Inc., a leading EV startup, has seen its stock rise in Hong Kong after confirming the launch of its first hybrid model, the X9 MPV extended-range electric vehicle (EREV), in the fourth quarter. The stock jumped 7.94% to HK$85.65, hitting a five-month high [2]. The X9 EREV features Xpeng's Kunpeng Super Electric System, offering a combined range of up to 1,400 km and a battery range of 430 km, the longest in the industry [2].

The challenges faced by China's automakers underscore the need for the industry to address financial challenges and improve cash flow management. The government's intervention and the ongoing efforts to meet the 60-day payment pledge indicate a commitment to addressing these issues and promoting healthier competition in the auto sector.

References:
[1] https://www.bloomberg.com/news/articles/2025-08-12/china-s-carmakers-fall-short-on-pledge-to-pay-suppliers-faster
[2] https://stocktwits.com/news-articles/markets/equity/xpeng-stock-hits-5-month-high-in-hong-kong-on-hybrid-x9-launch-buzz-here-are-the-details/chruZ3dRd4v