China Automotive Systems Reports Second Quarter Results

SHANGHAI, China, Aug. 20, 2003 -- China Automotive Systems, Inc. (BULLETIN BOARD: CAAS) , today announced financial results for the second quarter ended June 30, 2003.

"We are pleased with our financial results for the first half of the year as a newly public company with shares now traded in the USA," said Hanlin Chen, chief executive officer of China Automotive Systems. "As a key supplier of sophisticated power steering units and related automotive systems to Chinese automotive manufacturers, China Automotive Systems is well-positioned for further growth in the world's fourth largest and fast-growing automotive market where we are ranked second in our sector with more than 20% of the market share."

The Company's sino-foreign joint ventures are presented on a consolidated basis for the three months and six months ended June 30, 2003, as compared to the equity method of accounting for the comparable periods ended June 30, 2002. Accordingly, the results of operations for the three months and six months ended June 30, 2003 are not comparable to the periods ended June 30, 2002.

Net sales for the three months and six months ended June 30, 2003 were $12,358,000 and $23,489,000 respectively.

Gross profit for the three months and six months ended June 30, 2003 was $5,674,000 or 45.9% of net sales and $10,655,000 or 45.4% of net sales respectively.

Administrative, selling and general expenses for the three months and six months ended June 30, 2003 were $2,606,000 and $3,936,000 respectively.

Stock Compensation. During March 2003, in connection with the reverse acquisition completed in March, 2003, the Company issued common stock purchase warrants to three consultants to acquire an aggregate of 550,375 shares of common stock, exercisable for a period of one year at $1.20 per share. The aggregate fair value of these warrants, calculated pursuant to the Black-Scholes option pricing model, was $1,300,000, which was charged to operations for the three months ended March 31, 2003.

Profit from operations for the three and six-month periods ended June 30, 2003 was $2,378,000 and $4,410,000 respectively. Excluding the non-cash charge of $1,300,000 related to the issuance of warrants in March 2003, profit from operations would have been $5,710,000 for the six months ended June 30, 2003.

Profit Before Minority Interest. Profit before Minority Interest was $1,904,000 for the three months ended June 30, 2003 and $3,555,000 for the six months ended June 30, 2003. Excluding the non-cash charge of $1,300,000 relating to the issuance of warrants in March 2003, profit before minority interest would have been $4,855,000 for the six months ended June 30, 2003.

Minority Interest. The Company recorded the minority interests' share in each sino-foreign joint venture's earnings aggregating $1,278,000 for the three months ended June 30, 2003 and $2,737,000 for the six months ended June 30, 2003.

Net profit was $626,000 for the three months ended June 30, 2003 and $818,000 for the six months ended June 30, 2003.

Liquidity and Capital Resources:

At June 30, 2003, cash and cash equivalents were $7,734,000 and working capital was $18,093,000 reflecting a current ratio of 1.29:1.

At June 30, 2003, the Company's total assets were $77,322,000 and its shareholders' equity was $21,788,000.

Based in Shanghai, China, China Automotive Systems, Inc., registered as a Delaware corporation, through its wholly owned subsidiary, owns joint venture interests in four entities in China that manufacture power steering systems and other products for different segments of the automobile industry in China.

For further information please contact: USA Investor Relations, Carl Thompson, Principal of CTA Public Relations, Inc., +1-303-665-4200, carl@ctapr.com or www.ctapr.com, for China Automotive Systems, Inc.