The China Association of Automobile Manufacturers(CAAM)has issued a guideline to regulate payment terms in procurement contracts between vehicle manufacturers and suppliers,in a move to implement the regulation on ensuring payments to small and medium-sized enterprises,China Media Group(CMG)reported on Monday.
Automakers should not take advantage of their dominant position to the detriment of suppliers,but instead work together to build a collaborative and mutually beneficial ecosystem between vehicle makers and parts manufacturers,jointly promoting the high-quality development of China's auto industry,said the guideline.
The initiative urges automakers and suppliers to confirm key details such as order dates,parts names,quantities and delivery schedules through purchase orders,and states that any changes or cancellations should be made through mutual agreement.Payment terms should be calculated from the date of delivery and acceptance,with the period capped at 60 days.
It also encourages the two sides to build long-term partnerships,with each contract lasting at least one year.
An official from the CAAM said this move follows a series of earlier measures,including halting the release of"weekly sales rankings,"tightening rules on"assisted driving"promotion,cracking down on illegal low-price competition and launching a special campaign to curb online misconduct in the auto industry.Together,these efforts aim to safeguard the long-term,high-quality development of China's automobile sector,according to CMG.
In response to questions on how to view the recent initiative issued by the CAAM on standardizing payment practices between automakers and suppliers,and how enterprises will be guided to honor payment commitments,an official from the Ministry of Industry and Information Technology said the ministry supports the initiative,the Xinhua News Agency reported.
The official noted that the initiative specifies requirements on goods delivery and acceptance,payment terms,account settlement and fund transfers.For example,it clarifies that acceptance should in principle be completed within three working days;payment periods should start from the date of delivery and acceptance;small and medium-sized enterprises are advised to be paid entirely in cash or bank acceptance bills;and both sides are encouraged to build stable partnerships with contracts valid for no less than one year.These detailed provisions will help ensure payment commitments are effectively fulfilled and play an important role in promoting standardized development of the auto industry.
The official said that as China's auto industry accelerates electrification,new-energy vehicles(NEVs)are becoming mainstream.Yet compared with traditional fuel cars that have developed for over a century,the NEV sector is still young,with product structures,market scale and industry models rapidly evolving.Its supply chains remain immature and fragile,and delayed payments by automakers increase pressure on suppliers,directly affecting their ability to invest in innovation.Shorter payment terms,the official noted,will ease supplier burdens,improve automakers'management efficiency and help build a healthier ecosystem for high-quality growth.
Seventeen leading automakers have pledged to cap supplier payments at no more than 60 days,demonstrating responsibility and commitment,the official added.The ministry will make full use of coordination mechanisms to address implementation issues,strengthen cooperation between automakers and suppliers and promote the sustainable development of the industry.
After the initiative was released,a number of automakers have voiced their support,pledging to actively respond to the association's call.
SAIC said it formally adopted the 60-day standard in June 2025 and will avoid settlement methods such as commercial acceptance bills that add financial pressure on suppliers.BYD said it will further align with the initiative by tightening practices in areas including order confirmation,delivery,acceptance,settlement and contract terms,while working with partners to build a more collaborative supply chain.
GAC noted it has strictly upheld this principle since its founding in 1997 to help maintain supply chain stability,while Changan said it has implemented a"delivery date plus 10-day consolidated payment"scheme to ensure timely settlement and build a more standardized,efficient process for suppliers.
Both Xiaomi Auto and Li Auto voiced their support for the initiative on standardizing supplier payments and MIIT's guidance,reaffirming their commitment to keep supplier payment terms within 60 days.The two companies said they are strengthening practices in areas such as order confirmation,delivery,acceptance and settlement to better safeguard supplier interests and ensure stable supply chain operations.
Wu Shuocheng,a veteran auto industry analyst,told the Global Times on Monday that the initiative aligns with earlier efforts by government regulators to tackle overdue payments in the auto industry,representing progress toward more standardized governance.He stressed that the goal is to promote joint development between automakers and suppliers,rather than allowing carmakers to leverage their dominant position to delay payments indefinitely,which will harm suppliers'interests and growth.
Wu noted that such measures could help curb disorderly competition in the sector,and may also reshape the market."Suppliers with stronger cash flow could be in a better position to win orders under stricter payment terms,giving them an edge,"he said.Ensuring these measures to be effectively enforced,however,remains a key challenge,Wu added.
