At least eight Chinese automakers including BYD, Chery, and Xpeng pledge to pay suppliers within 60 days

At least eight Chinese automakers including BYD, Chery, and Xpeng pledge to pay suppliers within 60 days

In a significant move to bolster supply chain security and promote industry stability, at least eight major Chinese automakers have pledged to reduce their supplier payment terms to within 60 days. This commitment comes amidst growing concerns about the stability of the automotive industry's supply chain, particularly in the context of the rapid development of new energy vehicles (NEVs) and the ongoing price wars in the market.

The automakers involved in this pledge include BYD (HKG: 1211, OTCMKTS: BYDDY), Geely Auto (HKG: 0175), Chery, Changan Automobile, GAC Group, FAW Group, Dongfeng Motor, Seres Group, and Xpeng (NYSE: XPEV). These companies have stated that their decision is in response to regulatory authorities' requirements and aims to maintain the stability of the supply chain.

The announcement follows recent calls from regulatory bodies and industry associations for automakers to address the issue of lengthy payment cycles, which have been a source of concern for suppliers. The China Iron and Steel Association (CISA) has urged automakers to collaborate in safeguarding supply chain interests and resisting unfair competition, highlighting the pressure that extended payment terms have placed on upstream suppliers, particularly steel mills.

The pledges from these automakers are part of a broader effort to ensure the high-quality development of China's automotive industry. BYD, for instance, has refuted allegations that it is similar to Evergrande, emphasizing its commitment to stable payment cycles and corporate social responsibility. Geely Auto, Changan Automobile, Chery, and Xpeng have also issued statements emphasizing their commitment to accelerating capital turnover and ensuring the stability of the industry chain.

This development is part of a larger trend in the automotive industry, where international automakers have established long-term, close, and stable partnerships with suppliers. In contrast, some Chinese automakers have been criticized for relying on their own supply chain finance platforms to delay payments, shifting the financial burden onto suppliers.

As the automotive industry continues to evolve, these commitments to shorter payment terms will be crucial in maintaining the stability and resilience of the supply chain. The impact of these changes on the financial health of suppliers and the overall industry remains to be seen, but the move towards more transparent and timely payment practices is a step in the right direction.

References:
[1] https://cnevpost.com/2025/06/11/chinese-automakers-pledge-shorten-payment-cycles-suppliers/
[2] https://news.metal.com/newscontent/103369336/[611-Lithium-Battery-News]-BYD-XPeng-Geely-and-other-automakers-have-unified-their-supplier-payment-terms-to-within-60-days