CAAS Subsidiary Won ERP Award and Grant in Wuhu City

WUHAN, Hubei, China, January 26, 2009: China Automotive Systems, Inc. , a leading power steering components and systems supplier in China, today announced that the ERP system of its subsidiary and joint venture with Chery Auto, Wuhu Henglong Steering Systems Ltd. ("Wuhu Henglong"), has been recognized as one of the key science and technology projects in Wuhu City.

Wuhu Henglong commenced the development and implementation of its ERP system in September 2006, when China Automotive Systems established a joint venture with Chery Auto. In the past two years, this ERP system played an integral role in Wuhu Henglong's production, sales and accounting management. In January 2009, after more than six months' review and assessment, the Wuhu Department of Science together with the National Industrial Information Systems Committee, selected Wuhu Henglong as one of the best ERP systems. As part of this recognition, Wuhu Henglong received a technology grant from the local government.

This enterprise resource planning system is an important management tool. China Automotive Systems believes many of its customers will benefit from the recent stimulus policy (estimated at $586 billion) issued by the Chinese government. A part of this stimulus is designed to specifically enhance the growth of the automotive industry. There will be a total of RMB 10 billion ($1.5 billion) in government subsidies over the next 3 years to support innovative automotive manufacturers who upgrade their technology in both hardware and software to improve production and corporate management.

Mr. Qizhou Wu, Chief Executive Officer of China Automotive Systems, commented, "We are delighted to receive another award in the midst of the Chinese government's support in technology development. Beginning in January 2009, the purchase of vehicles with engines of 1.6 liters or less, will enjoy a 50% reduction in the sales tax from 10% to 5%. This policy is consistent with the Chinese government's plan to encourage the use of smaller, more fuel efficient and environmentally friendly vehicles. Many of our customers, leading Chinese national brands like Chery, Geely and BYD, are most likely the beneficiaries for this policy, as they have been focused on developing new technologies and building fuel efficient small cars."

"In addition to the government's support to the urban market, the Chinese government also will provide a RMB 5 billion subsidy to farmers who replace their older, outdated vehicles with new, more economical passenger vehicles and pick-up trucks. This subsidy will be in effect during 2009 and it is directed at aiding the automotive industry and reforming the rural economy, as part of the Chinese government's plan to achieve continued growth and maintain social stability. We believe we are well positioned to continue our growth in 2009," Mr. Wu concluded.