BYD and Chinese Automakers Commit to Timely Supplier Payments Amid Industry Push

China’s leading electric vehicle maker BYD announced it will strengthen efforts to ensure timely payments to suppliers, joining other major automakers in supporting an industry-wide initiative aimed at stabilizing the auto supply chain.

The move follows a proposal from the China Association of Automobile Manufacturers (CAAM), which seeks to address concerns over delayed payments and enforce stricter standards after a June pledge requiring automakers to pay suppliers within 60 days. The new rules emphasize clear processes for order confirmation, delivery, acceptance, payment settlement, and contract duration. According to CAAM, goods must be accepted within three working days, triggering the start of the 60-day payment period. Payments should be completed via cash or banker’s acceptance.

BYD’s pledge aligns with commitments from other major players, including SAIC Motor, Changan, Chery, and Xiaomi. Chery recently reported that it had shortened its average supplier payment cycle to 47 days, while most automakers remain vague about their timelines. CAAM noted that due to differences in supply chain systems, adherence to payment commitments has varied across companies.

The initiative comes as China’s auto industry faces mounting pressure from slowing demand and intensifying price competition. Over the weekend, the Ministry of Industry and Information Technology released an action plan calling for stricter oversight of the sector to prevent “disorderly competition.” The ministry also set lower vehicle sales targets for the year compared to CAAM’s earlier projections.

By enforcing transparent payment practices, industry regulators and automakers aim to strengthen supplier confidence, reduce financial strain in the supply chain, and create a more stable environment for China’s competitive electric vehicle market.