Byd promises supplier payments in a timely manner while China examines car manufacturers
Byd and Zhejiang Geely Holding Group have joined several of the automakers supported by the Chinese government in a commitment to standardize the payment of invoices to their suppliers at 60 days as the authorities of industry changes in industry to funding the supply chain.
At least three car manufacturers, including Dongfeng Motor Group, Guangzhou Automobile Group and China Faw Group published similar statements on Tuesday claiming that their payment plans were aimed at promoting effective capital flows between supply chains in the automotive industry. This was followed by other big names in the industry, including Chongqing Changan Automobile and Great Wall Motor, who also promised to comply with the 60 -day payment period.
To complete the burst of promises, the startups contributed by the United States Nio, Xpeng, Li Auto and the partner of Stellantis NV Zhejiang Leapmotor Technology. The Giant of National Technology Xiaomi, which has just launched its first model last year, also accepted the standardized period.
“Leapmotor has always maintained a 60-day payment period for suppliers,” Vice-President Li Tengfei said on Wednesday at a business event in Hong Kong. The automaker “will continue to work with suppliers for win-win cooperation,” he said.
The Chinese automotive industry, the largest in the world, was faced with a careful examination of the government after a prolonged domestic war has pushed certain manufacturers on the edge.
The country’s car manufacturers have looked for components at a lower cost and delayed payments to suppliers per month, creating a form of quasi-small financing. The regulators, including the Ministry of Industry and Information Technologies, have addressed the question of the question of financing the supply chain with the heads of large manufacturers of electric vehicles on the concerns that the price war became unbearable.
Chinese authorities have published new rules in March to protect small and medium -sized enterprises, stipulating that invoices should be paid within 60 days – the industry standard – and that large companies should not force small businesses to accept non -monetary payments such as order tickets or use these methods to delay payments. The regulations will take effect in June.
Chinese actions of automotive parts have increased, Morgan Stanley describing the decision as a positive that the shorter period of debtor accounts can lead to better cash flow and a low cost of provision. The days of debit accounts of Chinese car suppliers were generally greater than 100 in 2024, analysts, including Shelley Wang, wrote in a note.
Extended payment cycles are a characteristic of the Chinese automotive sector, periods far exceeding industry standards in other parts of the world. Byd took an average of 275 days to pay suppliers in 2023, according to compiled data from Bloomberg.
Funding for the supply chain is also common in the automotive industry. Byd, the best -selling car brand in China, has a system of order notes called Dilian, or Dilink in English, which he uses as a payment to its suppliers and can be bought later. The platform had issued 400 billion yuan ($ 56 billion) of tickets in May 2023, the last time byd disclosed this information.
A report by the GMT Research accounting consulting company puts BYD’s real net debt to more than 323 billion yuan, compared to the 27.7 billion yuan listed in its books in late June 2024, delaying its payments to suppliers and other related funding.
This story was initially presented on Fortune.com
