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May 13, 2008

This Week:

• Chrysler Celebrates Production of All-New 2008 Dodge Challenger SRT8(R)

• Limited edition model offered in cooperation with IWC Schaffhausen - SL 63 AMG Edition IWC

• GM And Isuzu Establish New Partnership To Focus On Commercial Vehicles In Colombia

• Sporty New Look For 2009 Ford Focus Coupé

• Land Rover G4 Challenge Nevada Passage Adventure Competition - Finale

• China Automotive Systems Reports 46% Increase in Revenue and 170% Increase in Net Income for 2008 First Quarter

• Toyota Announces Year-End Financial Results

• Nissan GT 2012 Mid-term Business Plan Unveiled

• Bajaj Auto and the Renault-Nissan Alliance to build the car code- named ULC

• Spyker Cars N.V. and Lotus Cars Ltd. Intensify Their Cooperation

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First quarter net sales for 2008 from steering products for passenger and light-duty vehicles increased to US$30.2 million as compared with US$21 million reported in the same period for 2007, reflecting a 44% year-over-year growth. First quarter net sales from steering products for commercial vehicles increased to US$11.3 million as compared with US$7.4 million reported in the same quarter for 2007, reflecting a 51.9% year-over-year growth.

Mr. Qizhou Wu, Chief Executive Officer of China Automotive Systems, commented, "We are excited to report a strong quarter witnessed by the high sales volume growth in particular from the accelerating sales in the commercial vehicle sector due to the forthcoming nationwide Euro III adoption. We are equally pleased with our strong growth momentum in the passenger vehicle sector, as our brand name, quality and service, and production capacity have been widely recognized by leading sino-foreign joint venture auto OEMs and Chinese national automakers in China. As global purchasing trend is upgrading from low-cost-high-volume to high-quality-high-technology, China Automotive Systems is well positioned for the broad market opportunities in the global market.''

Gross profit for the first quarter of 2008 increased to US$12.2 million compared with US$9.2 million in the same period for 2007, and US$12.7 million for the fourth quarter of 2007, reflecting a 32.9% increase year-over-year and a slight decline quarter-over- quarter growth, respectively. Gross margin declined to 29.5% from 32.4% in the first quarter a year ago due to higher material cost. The Company's research and development team is revising production techniques to reduce material waste and improve production efficiency, and price increase negotiations are underway. The annual gross margin goal is to achieve not less than 30%.

Operating income for the first quarter of 2008 was US$6.8 million, compared with US$5.2 million reported in the same period of 2007, and US$3.5 million for the fourth quarter of 2007, reflecting a 30.8% increase year-over-year and a 114.2% increase quarter-over-quarter, respectively. Operating margin for the first quarter of 2008 reached 16.4%.

Operating expenses in the first quarter of 2008 were US$5.6 million compared with US$4.1 million in the same quarter in 2007 and US$9.4 million in the fourth quarter of 2007. Selling expenses rose 55.3% to US$2.5 million from US$1.6 million in the same quarter last year due to higher sales and the related increase in warranty costs as well as higher transportation expenses. Depreciation rose by US$401,747 from US$ 0.9 million to US$1.3 million primarily due to the increased equipment in operation. General and administrative expenses in the 2008 first quarter were US$1.6 million, 7.1% higher versus the same quarter last year primarily because of greater labor insurance expenses.

Higher Other Income grew from increased government subsidies. There was also a positive swing in financial income from a negative US$394,997 to a positive US$20,693 due to changes in currency exchange and amortization for the discount of the US$35 million convertible notes.

An income tax decrease of US$469,685 in the 2008 first quarter compared with the same quarter in 2007, reflected an increase in deferred tax assets, a 5% reduced tax rate for one subsidiary, and refunds for equipment purchases.

First quarter net income in 2008 was US$4.4 million, or US$0.18 per weighted average diluted share as compared with US$1.6 million, or US$0.07 per diluted share in the same period a year ago, and compared with US$2.2 million, or US$0.09 per diluted share, for the fourth quarter of 2007. The first quarter net income represented 169.6% growth versus the same quarter in 2007 and a 104.8% rise over the 2007 fourth quarter. Weighted average number of fully diluted shares outstanding were 25,936,500 for the 2008 first quarter and 23,949,809 for the first quarter last year.

Total cash and cash equivalents as of March 31, 2008 totaled US$50 million compared with US$19.5 million as of December 31, 2007. Working capital was US$43 million. Stockholder's equity was US$48.5 million as of March 31, 2008 compared to US$67.2 million as of December 31, 2007. The reduction in stockholder's equity is related to the acquisition of the 35.5% of Henglong Automotive Parts Company during the 2008 first quarter.

Key Events in the 2008 First Quarter

In January, China Automotive Systems announced that its joint venture, Wuhu Henglong Auto Steering Systems ("WHAS"), was named a Core Supplier by Chery Automotive Co., Ltd. ("Chery Auto"). Under the joint venture agreement, China Automotive Systems and Chery Auto own 77.3% and 22.7%, respectively, of the joint venture. In December 2007, Chery Auto honored 30 of its Core Suppliers at its Annual Suppliers Meeting. With its reliable quality, new product development, and timely delivery, Wuhu Henglong Auto Steering Systems was among the 30 Core Suppliers named for the year 2007. WHAS's CEO Yusheng Han was present as an honored guest of Chery and he received the prize on behalf of the Joint Venture.

In February, the Company closed a previously announced senior convertible notes with warrants private placement transaction and received funding from Lehman Brothers ("Lehman") for $30 million and from YA Global Investments, L.P., which is managed by Yorkville Advisors, LLC, for $5 million. The proceeds are planned to support the Company's acquisitions, capital expenditures for expansion and working capital for future growth.

Also in February, China Automotive Systems announced that its subsidiary, Jingzhou Henglong Automotive Parts Co. ("Henglong"), has passed Dongfeng Peugeot Citroen Automobile Company Ltd ("DPCA") safety test and road test for its power steering gears and started preparing its initial shipment of model Dongfeng Peugeot 206 to DPCA. Since March 2005, Henglong has developed 3 power steering gears for DPCA: Dongfeng Peugeot 206, Dongfeng Citroen Elysee and Dongfeng Citroen new Xsara Picasso. The power steering gears for the Dongfeng Peugeot 206 have already passed the French UTAC safety test. The volume shipment is expected to begin in June 2008. According to the China Association of Automobile Manufacturers, Dongfeng Peugeot Citroen Automobile Company Ltd. produced over 213,000 passenger cars and sold 207,000 passenger cars in 2007. DPCA was consistently ranked as a top 10 passenger car producer in China since 2005.

Recent Developments

In April, China Automotive System announced it entered into the final definitive agreement to acquire an additional 35.5% of Henglong Automotive Parts Company ("Henglong") to increase its total ownership to 80%. This 35.5% ownership of Henglong alone represented more than US$5 million of net earnings in 2007. In 2007, Henglong posted net income of US$14 million. Henglong, formerly 44.5% owned by China Automotive Systems prior to this acquisition, is engaged in manufacturing power steering systems and components for China's rapidly growing passenger vehicle market. Henglong's main customers are among China's leading automobile manufacturers and include Chery Auto, Brilliance Auto, BYD Auto, Geely Auto and FAW Volkswagen. The purchase price of the acquisition will be approximately US$32.1 million. The payment will consist of US$10 million in cash with the remaining value to be paid in 3,023,542 shares of China Automotive Systems common stock valued at US$7.3060 per share.

(May 14, 2008)