As the Indian economy and auto market slows, automotive supplier companies are complaining that automakers are extending payment deadlines and that suppliers are therefore facing costly delays in getting paid.
Suppliers say that payment terms of 30-45 days are increasingly being stretched to as long as 90 days.
The situation is said to be particularly acute for suppliers to the commercial vehicle sector, which is feeling the brunt of an industrial slowdown.
India’s Auto Component Manufacturers’ Association, or ACMA, which represents auto component firms, has written to the government for help, saying that the crippling liquidity crunch has hit vehicle demand, especially in the commercial vehicle industry.
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“In the domestic market, the crippling liquidity crunch has slowed down vehicle demand, especially in the commercial vehicle industry. Payments from OEMs (original equipment manufacturers) to vendors are getting delayed, loans for capacity expansion are difficult to secure and even disbursement of loans already approved by the banks are being deferred,” said ACMA in its statement.
