Carmakers deliver on 60-day payment pledge, finds CAAM

Major Chinese automakers have shortened payment cycles to suppliers following commitments made last year to cap payment terms at 60 days, according to a survey released on Thursday by the China Association of Automobile Manufacturers.

In June 2025, 17 leading vehicle manufacturers pledged to limit supplier payment terms to no more than 60 days after the State Council revised the Regulations on Ensuring Payments to Small and Medium-sized Enterprises.

The move was widely seen as an effort to ease cash flow pressure on suppliers, particularly small and medium-sized enterprises, and enhance stability across the automotive supply chain.

CAAM’s latest research shows that most of the 17 companies have reduced payment periods to within the pledged 60-day limit.

The average payment term stands at about 54 days — roughly 10 days shorter than the same period a year earlier. Four companies have achieved average payment cycles of less than 50 days.

All 17 automakers calculate payment terms for SME suppliers from the date of goods delivery and acceptance, ensuring that the entire process from acceptance to payment does not exceed 60 days.

Fourteen companies have introduced additional preferential measures for SME suppliers. Two enterprises pay SME suppliers entirely in cash, and five allow financially constrained SMEs to apply for early payment.

According to CAAM, all surveyed companies have attached high importance to implementing their commitments.

Many have established dedicated working groups, issued internal policy documents and created long-term compliance mechanisms. Payment term adjustments have also been extended to existing contracts.

Some enterprises have upgraded financial management systems to enable automatic scheduled payments, reducing delays caused by manual processing.

Others have optimized settlement procedures by changing the starting point of payment terms from the accounting booking date to the delivery and acceptance date, and by increasing settlement frequency from monthly to every 10 days.

Several companies have earmarked special funds totaling more than 10 billion yuan to further improve supplier payment arrangements.

Despite the progress, CAAM acknowledged that some issues remain. Differences in defining the starting point of payment terms — including delivery acceptance, centralized reconciliation, invoice confirmation and loading verification — may result in discrepancies between nominal 60-day terms and the actual time suppliers wait to receive payment.

In some cases, process management requires further standardization to avoid de facto extensions of payment cycles.

The association also noted that a small number of enterprises have requested price reductions or imposed additional conditions while promoting shorter payment terms.

CAAM said it will continue to monitor the implementation of payment commitments and urge companies to strictly and promptly fulfill their pledges.

It also called for strengthened industry self-discipline to maintain a fair and transparent market environment and promote a more efficient and mutually beneficial industrial and supply chain ecosystem.