China's auto suppliers face severe cash flow challenges

Caijing estimated based on the third quarter financial report data of 2024 that the average turnover days for Chinese auto companies have reached 182 days. This signals that some upstream suppliers have to wait for six months to actually get the payment after investing capital in production, delivering goods, and paying a large amount of upfront payments - sometimes the payment is not in cash. For example, BYD introduced supply chain finance to create "Di Chain", and some accounts payable in the financial report were packaged into financial products and circulated among suppliers. According to industry insiders, under pressure from cash flow, some suppliers will eventually choose to discount the amount of the payment, or choose to discount it, to realize it in advance. This makes the supplier's cash flow tighter and tighter, and the various data in the financial report can be seen.