Chery Compresses Supplier Payment Terms to 47 Days, Is the Auto Industry’s Chronic Payment Delay Finally Being Solved?

On August 25th, Chery Group announced that from August 22nd to 23rd, the Ministry of Industry and Information Technology conducted a survey at Chery Automobile regarding its production and operation as well as efforts to oppose irrational competition.

The picture shows the scene of the survey symposium.

During this survey, Mr. Yin Tongyue, Chairman of Chery Holding Group Co., Ltd., highlighted the company's practices in optimizing supply chain payments. While experiencing rapid sales growth, Chery has earnestly implemented the requirements of the state and relevant ministries, resolutely optimized supply chain payments, and delivered efficient payments through a "four-pronged approach."

• Set "≤60 days payment terms" as a standardized and mandatory requirement.

• Promote efficient collaboration among all departments through full-chain implementation, ensuring a smooth and comprehensive chain review system.

• Achieve full-process online operations through digitalizing approvals.

• Using an advance payment mechanism to pay a certain proportion of the prepayment to small and medium-sized enterprises in advance, addressing the issue of insufficient funds for initial production startup.

Chery revealed that by implementing the "four major combination punches," the group has reduced the average payment period for suppliers to 47 days, effectively alleviating the financial pressure on suppliers and promoting the sustainable and healthy development of the supply chain system.The Gai Shi Global Automotive Industry Big Data Platform has collected nearly 500 supplier information entries of Chery Holding. For details, see:autodata.gasgoo.com）。

Automakers actively respond to policies, taking multiple measures to implement the 60-day payment commitment.

Chery's proactive actions are not an isolated case in the industry but a reflection of how automakers are currently responding to national policies and fulfilling social responsibilities.

In June this year, the State Council's revised "Regulations on Ensuring Payments to Small and Medium-sized Enterprises" were officially implemented. In response, 17 major automotive companies nationwide quickly pledged to "keep the payment period for suppliers to no more than 60 days," marking the beginning of standardized payment practices in the industry supply chain. To facilitate the transition of these commitments from "paper" to "implementation," the Ministry of Industry and Information Technology launched an "online issue (suggestion) feedback window for the practice of payment period commitments by major automotive companies" on July 9. This provided suppliers with a direct channel to report issues and effectively supervised the implementation by automotive companies.

Recently, with the 60-day period having passed, the commitment of car companies to payment terms has attracted widespread attention in the industry.

Gasgoo has noticed that recently, the official WeChat account of the Ministry of Industry and Information Technology, "MIIT Micro Report," published an article titled "Automakers Promise 60-Day Payment Terms, How Is the Progress?" The article specifically praised FAW Group, GAC Group, and Seres Group, highlighting the implementation status of these three automakers.

Specifically, in order to implement the "payment period not exceeding 60 days," China FAW has established a cross-departmental task force comprising finance, supply chain, and legal departments to create a closed-loop management system from process to supervision. In fulfilling the payment period commitment, China FAW has launched special support for small and medium-sized enterprises. Starting from June 2025, all recognized small and medium-sized enterprise suppliers will receive 100% cash payments, changing the previous "cash + bank acceptance draft" mixed payment model.

In addition to the unified 60-day payment term, GAC Group has established a negotiation mechanism for suppliers with long raw material production cycles, high capital occupancy, and short-term capital shortages, reducing the payment cycle to within 30 days or providing advance payments to alleviate their financial pressure.

According to GAC Group, since its establishment, it has consistently used cash transfers as the main settlement method. Although from 2023, the bank acceptance method subsidized by GAC Group was introduced, the proportion of settlements through this method is currently only about 5%. It is also revealed that for bank acceptance, GAC bears the full subsidy, making no difference for suppliers between choosing bank acceptance and cash transfers.

Seres is the first in the industry to pioneer the "factory within a factory" model, starting with spatial layout and process reconstruction to provide a unique solution for the smooth execution of a 60-day billing cycle. It is reported that the so-called "factory within a factory" model involves gathering the production lines of partners into Seres' super factory. This "embedded" layout shortens the distance from production to assembly to just a few hundred meters. This model reduces intermediate processes, lowers transportation costs, shortens the settlement cycle, reduces suppliers' inventory, effectively promotes the coordinated development of upstream and downstream enterprises in the industrial chain, and enhances the competitiveness of the entire industrial cluster.

In addition to the companies praised by the Ministry of Industry and Information Technology mentioned above, new car manufacturers such as Li Auto and XPeng Motors also successively advanced payment term adjustment work in July.

In late July, Li Auto announced that the company had completed the adjustment of payment terms for all direct procurement suppliers by mid-July. The contract payment term is 60 days, with monthly payments made twice in unified payment periods each month. In terms of settlement methods, the vast majority are conducted via wire transfer, with only a small portion using bank acceptance drafts.

Similarly, in July, media reports stated that they had obtained a notification email from XPeng Motors via its supply chain. The email showed that XPeng Motors announced it would unify its payment cycle to within 60 days. XPeng Motors Chairman He Xiaopeng later confirmed this news, stating, "After nearly a month of repeated internal discussions, XPeng has formulated relevant steps for adjusting and implementing the payment cycle, and has recently started to move forward with this process."

Image source: Screenshot from @XP-He Xiaopeng's Weibo

Whether it is Chery Group's "four major combination punches" or the differentiated practices of companies such as FAW, GAC, and Seres, these automakers' proactive actions have been highly praised by the Ministry of Industry and Information Technology and have set a positive benchmark for the industry.

Industry payment terms execution shows polarization; automakers need to proactively build a healthy supply chain ecosystem.

However, it should not be overlooked that the majority of car manufacturers in the industry still fail to honor their promised payment terms. A recent survey conducted by Gasgoo Automotive revealed this situation. The survey collected nearly 200 valid responses, involving suppliers from various segments including automotive fasteners, automotive electronics, automotive glass, vehicle interior and exterior trim, automotive power systems, and automotive chassis systems.

According to the survey data, over 60% of suppliers indicated that, up to now, they have not signed supplementary agreements or new contracts with their cooperating automakers that explicitly stipulate a "60-day payment term"; only about 30% of suppliers revealed that they have signed such agreements or contracts with individual automaker clients. This means that most automakers' "60-day payment term" commitments remain at the level of verbal or public statements and have not yet been converted into legally binding contractual terms, making it difficult for suppliers' rights to be effectively protected.

What is even more concerning is that, even among the few suppliers who have signed relevant agreements, the issue of "disguised extension of payment terms" is still quite prominent. Survey results show that over 70% of suppliers reported experiencing disguised extensions of payment terms by car manufacturers within the past 60 days.

From proactive breakthroughs by companies like Chery to some automakers' delays in execution, the current polarization of automakers in fulfilling the 60-day payment terms reflects the complexity of building a supply chain ecosystem in the industry.

For car manufacturers, shortening the payment cycle and optimizing the payment process may increase their financial pressure in the short term, but in the long run, these are key measures to enhance supply chain stability and strengthen supplier cooperation confidence. Only by allowing suppliers to produce with peace of mind, free of worries, can car manufacturers obtain higher quality component supplies, thereby improving product competitiveness. Conversely, if car manufacturers continually "squeeze" suppliers by indirectly extending payment terms and shifting costs, it will not only damage the trust in the partnership but may also lead to suppliers being unable to deliver goods normally due to a broken cash flow, ultimately affecting the car manufacturers' own production pace.

With the Ministry of Industry and Information Technology’s regulatory oversight continuously strengthening and suppliers’ awareness of safeguarding their rights gradually increasing, the industry will undoubtedly enforce stricter requirements on car manufacturers’ fulfillment of payment terms in the future.

For automakers that have yet to fulfill their payment term commitments, rather than passively responding to regulations, it is better to proactively learn from companies such as Chery, FAW, and GAC. They should develop practical and feasible solutions from multiple dimensions including systems, processes, and technology, truly turning the "60-day payment term" commitment into concrete actions. Only by doing so can a healthy, stable, and collaborative supply chain ecosystem be built, driving the entire automotive industry toward high-quality development.