BUSINESS

Under Fire, Chinese Carmakers Promise Prompter Payment for Suppliers

Published: Jun. 11, 2025 7:43 p.m. GMT+8

00:00

00:00/00:00

Listen to this article 1x

A BYD production line. The electric vehicle giant previously asked its suppliers to cut prices by 10% to help it win the price war. It has now pledged to accelerate payments to suppliers. Photo: BYD

More than a dozen Chinese carmakers have pledged to pay all their suppliers within 60 days, joining a government effort to curb a prolonged price war that has eroded profits across the industry and undermined supply chain stability.

A total of 17 major carmakers have made the 60-day payment pledge as of Wednesday afternoon, according to a tally released by the Ministry of Industry and Information Technology (MIIT).

You've accessed an article available only to subscribers

Subscribe today for just $.99.

VIEW OPTIONS

Unlock exclusive discounts with a Caixin group subscription — ideal for teams and organizations.

Subscribe to both Caixin Global and The Wall Street Journal — for the price of one.

Share this article

Open WeChat and scan the QR code

DIGEST HUB

Digest Hub

Back

Explore the story in 30 seconds

Seventeen major Chinese carmakers pledged to pay suppliers within 60 days, joining a government effort.
This initiative aligns with new State Council rules preventing large firms from delaying payments or coercing non-cash payments.
The pledges aim to address the automotive industry's prolonged price war, which has led to widespread late payments and eroded supplier profits.

AI generated, for reference only

Who’s Who

China FAW Group Co. Ltd.: China FAW Group Co. Ltd. is a state-owned Chinese carmaker. It is one of 17 major carmakers that have pledged to pay all their suppliers within 60 days. This commitment is part of a government initiative to stabilize the automotive supply chain and address issues arising from prolonged price wars in the industry.

SAIC Motor Corp. Ltd.: SAIC Motor Corp. Ltd. is one of 17 Chinese carmakers that pledged to pay suppliers within 60 days. This state-owned company is addressing government directives to stabilize the auto industry's supply chain and curb a prolonged price war that has eroded profits.

Chongqing Changan Automobile Co. Ltd.: Chongqing Changan Automobile Co. Ltd. is a state-owned Chinese carmaker. It has pledged to pay all its suppliers within 60 days, joining other major carmakers in a government-backed initiative. This effort aims to stabilize the automotive supply chain and mitigate the effects of a prolonged price war that has impacted industry profits.

Dongfeng Motor Group Co. Ltd.: Dongfeng Motor Group Co. Ltd. is a state-owned Chinese carmaker. It is one of 17 major automakers that have pledged to pay their suppliers within 60 days. This pledge is part of a government effort to mitigate a prolonged price war that has negatively impacted industry profits and supply chain stability.

Beijing Automotive Group Co. Ltd.: Beijing Automotive Group Co. Ltd. (BAIC Group) is a state-owned Chinese carmaker. It is among 17 major carmakers that have pledged to pay suppliers within 60 days. This pledge is part of a government effort to stabilize the auto industry and address the negative impacts of a prolonged price war.

Guangzhou Automobile Group Co. Ltd.: Guangzhou Automobile Group Co. Ltd. (GAC) is one of 17 Chinese carmakers that have pledged to pay all suppliers within 60 days. This state-owned firm's commitment is a response to government efforts to stabilize the auto industry's supply chain, which has been impacted by an ongoing price war and delayed payments to suppliers.

Chery Automobile Co. Ltd.: Chery Automobile Co. Ltd. is a state-owned Chinese carmaker. It is one of 17 major carmakers that have pledged to pay all their suppliers within 60 days. This pledge is part of a government effort to curb a prolonged price war that has negatively impacted the automotive industry.

Seres Group Co. Ltd.: Seres Group Co. Ltd. (601127.SH) is a private Chinese carmaker. It has pledged to pay all its suppliers within 60 days, joining other major carmakers in a government-backed effort to stabilize the auto industry's supply chain and curb a prolonged price war that has eroded profits.

Geely Automobile Holdings Ltd.: Geely Automobile Holdings Ltd. is a private Chinese carmaker that has pledged to pay all its suppliers within 60 days. This decision aligns with a government effort to mitigate a prolonged price war that has adversely affected the auto industry's profitability and supply chain stability. Geely was also mentioned as having followed BYD's lead in cutting prices.

BYD Co. Ltd.: BYD Co. Ltd. is China's largest electric-vehicle maker and a private firm that has pledged to pay suppliers within 60 days. Previously, BYD had asked suppliers for 10% price cuts, causing backlash. The company further cut prices on May 23, intensifying the price war.

KH Automotive Technologies Co. Ltd.: KH Automotive Technologies Co. Ltd. is a supplier of air springs and suspension components. Its chairman, Guo Chuan, publicly urged carmakers to pay suppliers within one month of invoicing, using electronic bank transfers. He also proposed annual moderate price reductions while ensuring suppliers maintain or increase profits compared to the previous year.

AI generated, for reference only

What Happened When

2023：: The price war has put carmakers under intense financial pressure since this year, impacting suppliers' profit margins.

Since the start of 2024：: Some automakers have demanded price cuts of over 10% for automotive steel sheets.

2024：: Many large players in the auto industry paid their bills after 120 days or even 200 days, according to their 2024 financial reports.

May 23, 2025：: BYD further cut prices, compelling competitors like Geely Automobile and SAIC to follow, resulting in a drop in stock prices across the Chinese mainland and Hong Kong.

June 1, 2025：: State Council’s new rules to protect small and midsize firms took effect, prohibiting large firms from coercing smaller businesses into accepting non-cash payments or using them to delay payments.

June 1, 2025：: Guo Chuan, chairman of KH Automotive Technologies, issued an open letter urging automakers to reconcile accounts, issue invoices, and complete payments within one month of invoicing, and to pay through electronic bank transfer.