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China Automotive Systems Reports 2009 First Quarter Financial Results

WUHAN, Hubei, China, May 12, 2009 China Automotive Systems, Inc., the "Company", , a leading power steering components and systems supplier in China, today announced its 2009 first quarter financial results for the period ended March 31, 2009.

  -- First quarter 2009 net sales increased 7.8% year-over-year to $44.7
     million;
  -- Net sales from steering components for passenger and light-duty
     vehicles increased 10.9% to $29.3 million; Net sales from steering
     components for commercial vehicles decreased to $9.7 million from $11.3
     million;
  -- Income from operations was $7.1 million for the 2009 first quarter
     compared with $6.8 million in the 2008 first quarter;
  -- 2009 first quarter non-GAAP diluted EPS was $0.13 versus $0.18 in the
     2008 first quarter, on 23.2% greater number of diluted shares
     outstanding in the 2009 first quarter;
  -- 2009 first quarter diluted EPS was $0.08 versus $0.18 in the 2008 first
     quarter, on 23.2% greater number of diluted shares outstanding in the
     2009 first quarter;
  -- 2009 first quarter net cash flow from operations was $8.9 million
     compared with negative cash flow in the first quarter of 2008.

Mr. Qizhou Wu, Chief Executive Officer of the Company, commented, "China has continued to grow despite the global economic recession, and in January 2009, China became the largest automotive market in the world. First quarter vehicle sales were up almost 4% to over 2.6 million vehicles. This growth is in sharp contrast to other markets which continue to report deep declines in vehicle sales. To boost economic growth in China, the Chinese Government implemented a number of stimulus packages for the automotive and agricultural industries in the first quarter of 2009. Demand began to pick up for vehicles during the 2009 first quarter, and especially for smaller passenger vehicles affected by the reduction in sales tax and the Chinese Government's vehicle subsidy for the rural markets."

Total net sales for the first quarter of 2009 increased 7.8% to $44.7 million compared with $41.5 million in the first quarter of 2008, and compared with $38.3 million for the fourth quarter of 2008.

First quarter net sales for 2009 from steering products for passenger and light-duty vehicles increased by 10.9% year-over-year to $29.3 million compared with $26.4 million in the same quarter of 2008. Net sales from steering products for commercial vehicles for the first quarter of 2009 decreased 13.4% to $9.8 million year-over-year from the $11.3 million reported in the same quarter in 2008. Net sales from oil pumps and sensors for the 2009 first quarter increased 45.6% to $5.4 million from $3.7 million in the year ago quarter.

Gross profit for the first quarter of 2009 was $12.2 million compared with $12.2 million in the same quarter last year, and compared with $10.7 million in the fourth quarter of 2008. The gross margin was 27.3% for the three months ended March 31, 2009, a decrease of 2.2% from 29.5% in the similar period last year. The decline of the gross margin was mainly due to the higher sales volumes of lower-priced products.

Income from operations in the 2009 first quarter was $7.1 million compared with $6.8 million in the same quarter in 2008, and compared with $964,000 in the fourth quarter of 2008.

Pro forma net income was $4.2 million compared with $4.7 million in the first quarter of 2008. Pro forma diluted EPS was $0.13 in the first quarter of 2009 compared with $0.18 in the similar quarter in 2008, based on a 23.2% greater number of diluted shares outstanding in the 2009 quarter.

Net income for the 2009 first quarter was $2.3 million, or $0.08 per diluted share versus $4.4 million, or $ 0.18 per diluted share in the previous year's first quarter, based on a 23.2% greater number of diluted shares outstanding in the 2009 quarter.