The Truth One Year After the Auto Giants’ “60-Day Payment” Promise: Why Are Suppliers Still Waiting for Their Money?
Hello everyone, I’m your financial journalist. Today, we’re going to discuss a topic that many small and medium-sized supplier owners both love and hate: have the automotive giants really kept their promise of a “60-day payment period”?
In June 2025, in response to the national regulations on ensuring payment for small and medium-sized enterprises, 17 leading car companies, including GAC, BYD, and NIO, pledged: “We guarantee that our payment period to suppliers will not exceed 60 days!”
Sounds great, right? After all, 60 days (two months) would significantly reduce the financial pressure on businesses. However, by February 2026, when the financial reports of these companies and data from industry associations were made public, the reality was a harsh blow: not a single car company had actually met the 60-day deadline!
What exactly happened? Were the companies lying, or were the numbers misleading? Today, we’ll break down the logic, the tricks, and the underlying reasons in plain language.
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I. Is the “60-Day” Promise Just a Mathematical Game? Why Don’t the Numbers in the Financial Reports Match Reality?
First, we need to understand a key question: Why do car companies claim they’re meeting the standards, but suppliers say they haven’t received their money?
There’s a huge gap in information. The “days of accounts payable turnover” (what we commonly refer to as the payment period) reported by car companies in their financial reports is completely different from the actual time it takes for suppliers to receive payment.
1. The “Deceptive” Accounting Method in Financial Reports
Investment banks and analysts usually use this formula to calculate the payment period:
> Payment period = (Accounts payable + Notes payable) / Cost of sales × Number of days
This formula has two major flaws:
- It only accounts for the cost of cars that have been sold; if the cars are still in storage, that cost isn’t included. Yet, suppliers have already delivered the parts, but the payment hasn’t been made.
- It treats “notes” as “cash.” Many payments made by car companies to suppliers are in the form of bank or commercial acceptance bills. In financial reports, these bills may be counted as “paid” or reduce the payment period, but in reality, suppliers have to wait months to convert them into cash.
**2. A More Accurate Method: Looking at “Purchase Amounts”
If we look at the actual amount owed by car companies to suppliers, the results are much less optimistic:
- In the first half of 2025 (soon after the promise): The longest payment period was 266 days for Seres, 245 days for BAIC BluePark, and 221 days for NIO. Even GAC and BYD had periods of around 137-142 days.
- For the whole of 2025: The situation improved slightly, with GAC at 119 days and BYD at 123 days. But even GAC’s period was more than double the promised 60 days!
Conclusion: The so-called “average payment period reduced to 54 days” (according to the China Association of Automobile Manufacturers) is more of an accounting optimization or a superficial effort by the leading companies. In reality, the 60-day goal is far from being achieved.
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II. The Car Companies’ “Word Games”: Starting Points and Acceptance Periods Are Full of Tricks
If the financial report data represents the “official” stance, then suppliers’ complaints reveal the “real” situation. Several small and medium-sized suppliers told us that car companies use various tricks to avoid the 60-day limit.
**1. Pushing the Starting Point Back: From “Delivery” to “Invoicing”
The national regulations state: “Payment must be made within 60 days from the date of delivery.”
But car companies do the following:
- Parts are delivered -> A long “acceptance period” (often one month) begins.
- Only after acceptance can the supplier issue an invoice.
- The 60-day payment period starts only after the invoice is issued.
- Result: From the time parts are delivered to the factory until payment is received, it can take 3-4 months. Car companies say, “We’ll pay within 60 days of seeing the invoice; we’re complying!” Suppliers respond, “My goods were delivered half a year ago, and I still haven’t received any money!”
2. Using “Notes” Instead of “Cash”: A Hidden Delay
Car companies prefer to issue commercial or supply chain notes.
- For car companies: Issuing a note for six months later can adjust their cash flow and may even be counted as “paid” in certain statistics.
- For suppliers: They have to wait months to convert the note into cash at the bank or sell it at a discount to a third party, incurring additional costs.
3. Vague Acceptance Standards: Infinite Delays
The problem is that the acceptance criteria are often unclear. If car companies set up complex acceptance processes or delay acceptance due to “quality issues,” the 60-day countdown never starts.
In simple terms: Car companies have turned the 60-day promise into 60 days + acceptance period + note conversion period. For suppliers, this is far from 60 days.
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III. Who Is “Defaulting” and Who Is “Making an Effort”? A Diverse Picture of Car Companies
Although no company has met the standard, there are significant differences among them. Let’s categorize them to see who is delaying and who is making changes:
1. The “Deadbeat” Group: Extremely Long Payment Periods
- Seres (Qingjie): 266 days in the first half of 2025, 227 days for the whole year, and even 280 days in the first half of 2026.
- Reason: Seres operates on an outsourcing model, relies heavily on external parts, and is in a period of rapid expansion, putting significant financial pressure on it. It has limited bargaining power with suppliers and uses long payment periods to tie up their funds.
- Jianghuai Automobile, NIO: Payment periods are also over 200 days.
- Reason: Jianghuai faces operational challenges; NIO, as a new entrant with a high-end brand, is in continuous loss and has tight cash flows, so it extends payment periods to survive.
2. The “Middle-of-the-Pack” Group: Some Improvement, but Still Long
- Changan, Great Wall, SAIC, Chery: Payment periods range from 150-200 days.
- Characteristics: These traditional companies are large with complex supply chains. Although they’re better off than new entrants, they’re still far from the 60-day goal. Changan’s payment period even increased compared to the first half of the year, indicating instability.
3. The “Top Performers”: Relatively Faster, but Still Not at 60 Days
- GAC, BYD, Geely: Payment periods are around 120-140 days.
- Positive Points: Geely significantly accelerated its payment speed in the second half of 2025, and both GAC and BYD, as industry leaders, have strong financial strength and are more willing (and able) to shorten payment periods.
- Note: Even these “top performers” are still more than twice the promised 60 days.
4. The Differentiation Among New Entrants
- Li Auto: Performed well, with a payment period of 162 days in the first half of 2026, a significant improvement.
- Xpeng, Leapmotor, NIO: Payment periods range from 170-230 days, with significant fluctuations. Xpeng’s period increased in the first half of 2026, suggesting increasing financial pressure.
Trend Observation: In the first half of 2026, 8 companies reduced their payment periods compared to the same period last year, while 6 increased. Overall, the industry’s payment period is shorter than in the first half of 2025 but longer than for the whole of 2025. This shows that car companies are making some progress, but they’re still far from the promised 60 days.
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IV. The State Is Taking Action: From “Advocating” to “Regulating,” but Is the Effort Enough?
Faced with car companies’ non-compliance, the state has finally taken action:
1. A Major Policy Release
On September 7, 2025, the Ministry of Industry and Information Technology and the State Administration for Market Regulation jointly issued the “Notice on Promoting Standardized Payment to Suppliers and Optimizing Payment Periods in the Automotive Industry.” This is the first national regulation specifically targeting the automotive industry’s payment practices.
2. Key Requirements: Eight Points
- Clear Starting Point: No more tricks with the acceptance period.
- Standardized Acceptance: No indefinite delays in acceptance.
- Compliant Payment Methods: Encouragement of cash payments and restriction on the misuse of notes.
- Limit on Electronic Documents: The maximum payment period for electronic documents (such as supply chain notes) has been reduced to six months.
3. Introduction of Third-Party Evaluation
The notice mentions introducing third-party institutions to assess companies’ payment practices. This means that car companies’ performance will no longer be evaluated solely by themselves but by independent reviewers.
4. However, There’s a “But”
Despite the strict regulations, the wording is important:
- The requirement to pay within 30-60 days to small and medium-sized companies is still an “advocacy,” not a mandatory “requirement.”
- This means that there are no clear penalties (such as fines or blacklisting) if companies don’t comply.
In simple terms: The state has imposed a “tightening” on car companies, but the enforcement is still soft. Companies can verbally agree to the rules and continue to delay payments. Unless stricter penalties are introduced, the “advocacy” will remain ineffective.
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V. Why Are Car Companies Reluctant to Pay on Time? Uncovering the Underlying Reasons
Finally, let’s address the fundamental question: Why, despite knowing the difficulties suppliers face, are car companies unwilling to shorten payment periods?
1. Thin Profits, Lack of Cash
After more than three years of price wars and declining passenger car sales in 2026, the automotive industry’s profit margins are very low.
- A large part of car companies’ profits come from using suppliers’ funds.
- Shortening the payment period from 180 days to 60 days would require them to pay out significant amounts of cash, which is detrimental to their already meager profits.
- In other words, car companies are using suppliers’ money to sustain their operations and expansion.
2. The “Matthew Effect” in the Supply Chain
- Leading companies (like BYD and Geely) have bargaining power and financial strength, so they can pay faster.
- Weaker companies (such as some new entrants and outsourcing firms) have tight cash flows and rely on long payment periods to extract more value from suppliers.
- Suppliers are in a weaker position and have no choice but to tolerate long payment periods and notes.
3. Industry Inertia
The automotive industry has long had a de facto standard of 6-month payment periods or longer. Suddenly changing this would disrupt the entire supply chain’s cash flow, bank lending, and suppliers’ operations. Companies are waiting to see who will be the first to suffer.
4. The “Last Mile” of Policy Implementation
Although there are regulations, enforcement is lacking:
- Suppliers are afraid to sue car companies for fear of being excluded from the supply chain.
- Regulatory authorities have difficulty monitoring every payment in real-time.
- Third-party evaluations are still in their early stages and have limited deterrence.
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Conclusion: A Win-Lose Situation for All
The current situation one year after the “60-day payment period” promise is as follows:
1. No company has met the standard: The shortest periods are still over 120 days, and the longest are near 300 days.
2. Misleading Data: Financial reports hide the actual payment delays; notes and acceptance periods are the main sources of deception.
3. The State Is Tightening: Policies are becoming more stringent, but the enforcement is insufficient.
4. The Fundamental Issues Remain: Low car company profits, suppliers’ vulnerability, and industry inertia make it difficult to resolve the payment period problem.
Implications for Everyone:
- If you’re a supplier: Don’t expect car companies to suddenly change their behavior. Try to get cash payments, shorten the note period, and clearly define acceptance criteria and starting points in contracts. Assess the credit risk of car companies to avoid being financially strained.
- If you’re an investor: Pay attention to changes in companies’ “days of accounts payable turnover.” A significant reduction in the payment period may indicate improved cash flow; a continuous extension may indicate financial difficulties. This is an important financial indicator.
- If you’re a consumer: Although the payment period issue mainly affects businesses, it affects the stability of the supply chain and product quality. A healthy supply chain is essential for producing quality cars.
In the words of an industry insider: “It’s a good thing that the payment period is getting shorter, but it’s happening too slowly and painfully.” We hope that one day, the 60-day promise will become a reality.