Universal Automotive Industries, Inc. Issues Letter to Shareholders and Customers

ALSIP, Ill., July 10 -- Universal Automotive Industries, Inc. today announced that it will be mailing the attached mid-year letter from Arvin Scott, its President and CEO, to Shareholders and Customers, addressing the status of its business:

  To Our Shareholders and Customers:

  Typically I write to you just once a year -- but these have not been
  typical times.  Coming off the heels of a profitable year in 2002, where
  we were beginning to feel the wind at our backs, it's discouraging to have
  lost some momentum due to factors beyond our control.  So, I want to take
  the opportunity at the mid-year mark to review some of the initiatives
  that have been implemented to right our business and share with you some
  of our plans for the balance of 2003 aimed at bringing Universal
  Automotive Industries to performance levels that will result in sustained
  profitability.

  As we have noted before, in 2002, Universal was negatively impacted by a
  sales decline that was primarily a result of consolidation among auto part
  distributors and retailers and pricing deflation in the brake drum and
  rotor segment.  We were able to mitigate these lost sales and margins due
  to cost containment efforts and reflect a modest profit in the year.

  During the months of April, May and June of 2003, the company suffered
  significant supply chain challenges in its core product line of brake
  drums and rotors.  These fill rate declines were due primarily to a fire
  that occurred at the location of a key supplier in late February and were
  further exacerbated by late shipments from a secondary supplier.  I am
  pleased to report that we now believe we have this situation under control
  and expect that Universal's supply chain fill rates during the first weeks
  of July will be at a 90 percent level.  However, to respond to softer
  sales due to the inability to fill orders, we have implemented additional
  aggressive cost controls throughout the organization that are expected to
  save us between $550,000 and $700,000 on an annualized basis.

  I believe strongly that we are able to successfully meet our challenges
  head on by leveraging the expertise we have built over the course of the
  last 15 months with new key executives whose industry experience
  compliments the myriad talents of existing Universal employees.  Guided by
  this bolstered team, additional restructuring efforts have included
  workforce reductions, productivity improvements at our manufacturing
  locations, the divestiture of certain non-performing businesses, the
  refinancing of debt and salary reductions at the executive management
  level.

  In addition to the initiatives implemented thus far, we have engaged an
  outside strategic advisor to augment our efforts and help refine our
  strategic plan to fundamentally strengthen the company from the bottom up.
  I am confident that they will provide important insight and advisory
  services to enable us to better leverage Universal's infrastructure and
  core competencies.  Part of this strategy might include evaluating certain
  key acquisitions subject to availability of financing.  Such moves will be
  considered very selectively to ensure they advance our goal of
  strengthening our position as a leading automotive brake part supplier to
  distributors and retailers in the United States.

  To further reinforce our balance sheet and provide capital for general
  corporate purposes, in early July 2003, we completed a private placement
  of securities to an accredited investor in the gross aggregate amount of
  $1.55 million.  Under terms of the financing, Universal Automotive
  provided the investor with a two-year deferred interest convertible
  unsecured note, 50 percent of which is convertible into common shares at
  any time following 180 days after the closing date of the transaction.
  The remaining 50 percent of the note will be convertible at any time
  following 300 days after the closing.  The note will be convertible into
  common shares at a conversion price equal to 100 percent of the volume
  weighted average sales price for ten trading days immediately prior to the
  related notice of conversion and carries additional warrants.  For
  additional information regarding the private placement please refer to the
  company's Form 8K as filed with the Securities and Exchange Commission and
  available on its website.  Reedland Capital Partners, an institutional
  division of Financial West Group, acted as placement agent in the
  transaction.

  We are determined to bring the company to a level of sustained
  profitability and to generate a return on shareholder equity that mirrors
  the high intrinsic value that we believe exists within the company.
  Achieving this objective will take some time.  For fiscal 2003, we expect
  to report a net loss in the range of $550,000 to $1.0 million due,
  primarily, to the supply chain problems reported earlier.  However, with
  these fill rate problems behind us, we believe we are in a better position
  to implement our strategic plan.

  Our paramount goal, however, is to maintain what we believe is Universal's
  unparalleled reputation for being responsive to customers' needs.   As we
  move forward, we plan to enhance customer satisfaction to ensure that our
  highly skilled, world-class customer service team is available to answer
  any questions that may arise -- recognizing that, to build market share,
  we must, in addition to manufacturing and distributing quality products,
  stay in close contact with our customers in order to retain a competitive
  edge and foster life-long business partners.

  In conclusion, we want to express our sincere appreciation to our
  employees, our customers and our shareholders for supporting us through a
  challenging time.  We have a definitive plan to emerge from these
  challenges a solid, viable company deeply committed to supplying world
  class brake parts to a growing automotive aftermarket.   I look forward to
  reporting to you on our progress during the months ahead.

  Sincerely,

  Arvin Scott
  President and Chief Executive Officer
  July 10, 2003

This communication contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by safe harbors created hereby. Such forward-looking statements involve known and unknown risks, uncertainties (including those risk factors referenced in the Company's filings with the Securities and Exchange Commission and the risks that the Company will not be able to recover from the challenges presented by its recent supply chain problems and the risk that projections are susceptible to numerous factors outside the Company's control), and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance, or achievements of the Company expressed or implied by such forward-looking statements.

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