China Automotive Systems Enters a $5 million Stock Purchase Agreement and Secures $15 million in Standby Financing

WUHAN, Hubei, China, March 24 /Xinhua-PRNewswire/ -- China Automotive Systems, Inc. , a leading power steering components and systems supplier in China, announced that it has entered a $5,000,000 Stock Purchase Agreement and secured an additional $15,000,000 in financing with Cornell Capital Partners, LP (''Cornell'') to support the continued growth of the Company.

Under the agreement, Cornell Capital purchased $5,000,000 of China Automotive Systems' (''CAAS'') common stock and has committed to provide up to $15 million of funding in the form of a Standby Equity Distribution Agreement (SEDA).

The stock purchase agreement set the purchase price at 83.16% of the market price, defined as the average volume weighted average price during the ninety consecutive trading days prior to March 17, 2006; with warrants for 86,806 shares with an exercise price of $14.40 and a warrant for 69,444 shares with an exercise price of $18.00. The $15 million Standby Equity facility allows China Automotive Systems to draw down from this amount over a 24-month period and at China Automotive Systems' discretion.

Mr. Hanlin Chen, Chairman & Chief Executive Officer of China Automotive Systems said: "The agreements with Cornell Capital will allow the Company to meet the growing demand in China and in the International markets for our systems. We are supplying power steering components and systems to more than 50 automotive manufacturers in China. The Company is developing electronic power steering systems, next-generation products and has planned for production expansion in existing products. We welcome the financial arrangement with Cornell Capital, which will enable China Automotive Systems to further develop our output capacity, R&D, and sales distribution." David Andresen, Vice President at Cornell Capital Partners, L.P., stated: "We are pleased and honored to enter into a long-term relationship with China Automotive Systems. The Company is in the unique position as the largest independent supplier of power steering components and systems to the emerging Chinese automotive market. We are looking forward to working with the Company's management team."

About China Automotive Systems, Inc.

Based in Hubei Province, People's Republic of China, China Automotive Systems, Inc. is a leading supplier of power steering components and systems to the Chinese automotive industry, operating through four Sino-foreign joint ventures. The Company's product offering encompasses a full range of auto parts which are incorporated into steering systems for both passenger automobiles and commercial vehicles. The Company currently offers four separate series of power steering and 307 models of power steering with an annual capacity of 600,000 sets, steering columns, steering oil pumps and steering hoses. Its customer base comprises of leading Chinese auto manufacturers such as China FAW Group, Corp., Donfeng Auto Group Co., Ltd., Brilliance China Automotive Holdings Ltd., Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. etc. For more information please visit: http://www.caasauto.com/ .

About Cornell Capital Partners, LP

Cornell Capital Partners, LP is a U.S.-based private equity fund. The Fund is headquartered in New Jersey, with offices in California, Florida and London (UK). For more information please visit: http://www.cornellcapital.com/ .

Forward-Looking Statements:

This release may contain statements we believe are, or may be considered to be, "forward-looking statements". These forward-looking statements generally can be identified by use of the statements that include phrases such as we "expect," "plan," or other similar words or phrases. Similarly, statements describing our objectives, plans or goals also are forward-looking statements. All of these forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the expected results expressed or implied by the relevant forward-looking statement.

  For more information, please contact:

   Jie Li, Investor Relations,
   China Automotive Systems, Inc.
   Tel:   +86-27-5981-8527
   Email: jieli@chl.com.cn

   David Andresen, Vice President
   Cornell Capital Partners, LP
   Tel:   +1-858-552-1177 x14
   Email: dandresen@cornellcapital.com