CHINA AUTOMOTIVE SYSTEMS

NASDAQ : CAAS

Company At a Glance

China Automotive Systems, Inc. is a leading supplier of power Steering components and systems to the Chinese automotive industry.

Exchange Symbol : Nasdaq:CAASRecent Stock Price :52-Week Price Range : $3.25 – 18.09 P/E Ratio (TTM) :Average Daily Volume : (3 months) 37107 Market Capitalization : $157.54M

MilestonesSeptember 1997 – Established Henglong company for producing Power Steering Gear which was utilized in light-duty vehicles and sedansAugust 1999 – Completed safety production line and began mass productionMarch 2000 – Achieved QS9000 and VDA6.1 quality system certificateDecember 2000 – Approved to become OEM supplier for Dongfeng CitroenOctober 2001 – Signed licensing agreement with Bishop Steering Technology Co., Ltd for automotive power steering valve technologyDecember 2002 – Awarded “High-Tech Enterprise ” certification by Hubei ProvinceJuly 2002 – Established Zhejiang Henglong Wanan Pump Co. (J/V with Zhejiang Wanan Group)May 2003 – Completed reverse merger; registered as Delaware corporation December 2003 – Licensing agreement signed with Korean automotive company, NamYangfor steering columnsDecember 2003 – Annual sales of power steering systems reached 400,000 unitsJanuary 2004 – Achieved TS/16949 quality system certificateJune 2004 – Recognized as “One of the 100 Best” automotive suppliers by China Automotive Engineering AssociationAugust 2004 – Listed on Nasdaq Small Cap November 2004 – Selected as Exclusive Supplier for Steering Pumps for General Motors Joint Venture in China January 2005 – Signed Technology Licensing Agreement with Korea Delphi Automotive Systems

Investment Overview

Leading Market Share

Diverse National Footprint

Broad Product Offering

Customer Base Comprised of Leading Chinese Auto Manufacturers and Many Foreign Manufacturers

Strategic International Partnerships

Strong Technological & Research and Development Capabilities

Strong Veteran Management

Investment OverviewLEADING MARKET SHARE

– China Automotive is the second largest supplier of power steering components and systems to the Chinese automotive industry. The first one ZF is tied directly to SAIC-Volkswagen.

– The Company has long-term business relationships with more than 50 vehicle manufacturers.

– Fragmented industry - seven major competitors –three Sino-foreign joint ventures and four state-owned

– Total output was 2.4 million units last year– China Automotive supplied approximately 450K units in 2004

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C A A SS H A N G H A I Z FF K SD O N G F E N GF A WY U B E IJ IN G M E NS H IB A OO T H E R S

Investment Overview- Diverse National Footprint

Diverse National Footprint

– Based in Hubei Province, People’s Republic of China

– The company manufactures and serves its customer base through four production facilities and employs approximately 2,000 personnel

Jingzhou Henglong Automotive Parts Co.Shashi Jiulong Power Steering Co.Shenyang Jinbei Henglong Automotive Steering System Co LtdZhijiang Henglong & Vie Pump-Manu Co. Ltd

ZHEJIANG HENGLONG VIE

SHASHI JIULONG

SHENGYANG JINBEI

HENGLONG

JINGZHOU HENGLONG

Investment Overview

JINGZHOU HENGLONG AUTOMOTIVE PARTS CO., LTD.JINGZHOU HENGLONG AUTOMOTIVE PARTS CO., LTD.SHASHI JIULONG POWER STEERING CO., LTD.SHASHI JIULONG POWER STEERING CO., LTD.Total Area : 425,091 m2 (105 acres)Building Area : 49,105 m2 (528,562 ft.2 )Employees : 1,530Products : Integral Ball& Nuts Power steering

R&P Power Steering GearsSteering Column & Steering Hoses

2004 Units : 363,759

Investment Overview - Manufacturing Facilities

Investment Overview - Manufacturing Facilities

SHENYANG JINBEI HENGLONG SHENYANG JINBEI HENGLONG AUTOAUTO--STEERING SYSTEM CO., LTD.STEERING SYSTEM CO., LTD.Total Area : 35,354 m2 (8.75 acres)

Building Area : 11,413 m2 (122,849 ft.2 )Employees : 218 Products: R&P Power Steering Gears

R&P Manual Steering Gears2004 Units : 81,834

ZHEJIANG HENGLONG VIE PUMP CO., LTD.ZHEJIANG HENGLONG VIE PUMP CO., LTD.Total Area : 27,756 m2 (6.86 acres)Building Area : 7,262 m2 (78,168 ft.2 )Employees : 209 Products : Power Steering Pumps2004 Units : 94,881

Investment Overview - Manufacturing Facilities

Investment Overview - Awards & Certificates

Internationally Certified Manufacturing Facilities

The Henglong and Jiulong manufacturing facilities received ISO/TS 16949 Certification in January of 2004.

Company received ISO 9002, QS9000 and VDA6.1 quality system certificate in March of 2000.

Vesteon Quality System Verification in July 2004.

Investment Overview - Company Structure

Investment Overview - Broad Product Offering

The company’s product offering encompasses a full range of auto parts which are incorporated into steering systems for both automobiles and commercial vehicles.

The company currently offers approximately four separate series of power steering sets and 307 models of power steering sets, steering columns, steering oil pumps and steering hoses.

Steering Column(Safety, Tilt)

R & P Power Steering Gears*

Steering Hoses

Steering Pumps

Investment Overview - Key Customers

Customer Base Comprised of Leading Chinese Auto Manufacturers

The Company’s Ten largest customers represent approximately 73.1% of total sales.

Customer %Brilliance China Automotive Holdings Ltd. 19.2%Beiqi Foton Motor Co., Ltd. 16.2%Donfeng Auto Group Co., Ltd. 10.9%China FAW Group, Corp. 7.2%Chery Automobile Co., Ltd. 4.3%Great Wall Motor Company, Ltd. 4.3%Zhejiang Geely Holdings Co., Ltd. 3.7%Shanxi Heavy Auto Co., Ltd. 2.8%Southeast (Fujian) Auto Industry Co., Ltd. 2.3%Hebei Zhongxing Auto Co., Ltd. 2.2%Other 26.9%

Key Customers – Customer Profiles

Brilliance China Automotive Holdings Ltd. -http://www.brillianceauto.com

Brilliance China is one of the leading automotive manufacturers in China through its subsidiaries, associated companies and joint ventures.

The company manufactures minibuses and automotive components, and sedans.

Its commercial vehicle brands include "JinBei" and "Granse" minibuses and its sedan brand includes "Zhonghua".

In 2003, the Group also established a joint venture with BMW to produce BMW 3-series and 5-series sedans in China.

In addition the company has established strategic partnerships or working relationships with leading global automotive companies, such as Toyota, Mitsubishi, FEV Motorentechnik Gmbh, Porsche and Italdesign S.p.A.

The company has over 8,700 employees, the Group achieved revenue of RMB10.1 billion for the year ended 31st December, 2003.

Beiqi Foton Motor Co., Ltd. http://english.foton.com.cn

Beiqi Futian (Foton) is a state-owned enterprise which was established in 1996 by merging 100 other companies from 13 municipalities.

The company is a leading producer of four-wheel farm vehicles and with the approval of the State Machine-Building Bureau ventured into automobile manufacturing in1998.

The corporation possesses a total asset of 4 billion RMB and has approximately 15,000 employees.

Foton’s main products are automobile, engine, tractor, harvest machinery, economic light truck, chemical building material and equipment, and structural steel strut.

The company sold 260,235 passenger cars and 209,842 light trucks in 2003.

Key Customers – Customer Profiles

Dongfeng Auto Group Co. - www.dfmc.com.cnDongfeng Motor Corporation (abbr. DFM) has grown to be one of the three big automotive groups in China since it was founded in 1969. The company’s products include full series commercial vehicles, passenger cars, and automotive components and devices.The company is based in central China's Hubei Province.At the end of 2003, the company had RMB 63.68 billion in total assets, RMB 27.3 billion in net assets and 112,000 employees.The company currently has international alliances with Nissan and Mitsubishi.

Key Customers – Customer Profiles

China FAW Group, Corp. – www.faw.com.cn

FAW Group Corp., also known as First Automotive Works, was founded in 1953 and is the biggest automotive industrial conglomerate in China.

The company is located in Changchun, Jilin Province, North East China and employs more than 200,000 people.

FAW has 35 assembly plants throughout China, 11 sub-companies (controlled solely by FAW), 12 holding companies and 14 joint ventures. And there are 200 other enterprises related to FAW.

The company established a JV with Volkswagen AG in 1990.

FAW also has a JV with Toyota Motor Corp.

FAW Group Corporation produced more than 1 million units in 2004 and the company exports vehicles to over 30 countries.

Key Customers – Customer Profiles

Chery Automobile Co., Ltd. - www.cheryglobal.com

Chery Automobile Co.,Ltd was founded in 1997 and is based in Wuhu, Anhui Province.

The company is one of the fastest growing independent auto manufacturers in China.

The company has production capacity of 400,000 engines and 300,000 whole cars.

Chery currently ranks in the top eight in the domestic auto industry.

The company has established a Joint Venture with Visionary Vehicles and is preparing to export to the U.S. market in 2007.CAAS will be its exclusive power-steering supplier for its exporting vehicles.

The company plans to introduce several different models in including, an entry level compact, a mid-size sedan, a luxury coupe, an SUV, and a Crossover.

The exported vehicles are expected to be priced 30% below existing comparable vehicles and carry a 100,000 mile/10 year warranty.

Key Customers – Customer Profiles

Rack & Pinion Power Steering Gears

Key Customers by Product Category

Integral Power Steering Gears

Key Customers by Product Category

Steering Columns

Key Customers by Product Category

Investment Overview – Strategic International Partnerships

January 2005 – Korea Delphi Automotive Systems Corporation– 10-year agreement– Manufacture and export automotive steering systems– Systems used in GM Daewoo Auto & Technology Company’s Matiz vehicle

November 2004 – General Motors (SAIC GM Wuling Automobile Co.)– Manufacture steering pumps for Spark 1.0 vehicle– Expected to produce 10,000 units in 2005– Exclusive contract

August 2004 – Advanced Custom Sensors, Inc. – Letter of intent to establish joint venture– Expected to commence production by July 2005– Sensors used in electronic control systems for vehicles– Anticipated initial output of 4.5 million sensors with net sales of approximately $40 million

December 2003 – Namyang (Korean automotive company)– Namyang is a leading steering column manufacturer– Entered into technology transfer agreement for electronic power steering systems

October 2001 – Bishop Steering Technology Co. – Bishop is a leader in steering gear technology– Bishop’s technology currently used by BMW and Mercedes Benz– China Automotive and Bishop entered into 10-year licensing agreement for power steering valve

technology

Investment Overview -Strong Technology and R&D Capabilities

More than 100 engineers dedicated to R&D

The Company invests approximately 25-30% of net sales of new products on R&D

The company currently holds 12 Chinese patents utilized for power steering technology

Technology agreements with Bishop Steering Technologies and Advanced Custom Sensors

Company has established technology and R&D centers

Investment Overview – Strong Technology and R&D Capabilities

Hubei Provincial-Level Technical Center– Approved by the Hubei Economic

Commission– 110 employees – 25 senior engineers,

four foreign experts, 70 engineers– Focused on R&D, testing, production

and process improvement, and new material and production methodology application

Changchun Hualong Auto Technology Co., Ltd. R&D Center

– 45 employees – 10 senior engineers, 3 foreign experts, 25 engineers

– Focused on steering system R&D, tests, and new material application

In 2003, China Automotive established a steering systems research institute with Tsinghua University.

– Develop the Electronic Power Steering (EPS) and Electronic Hydraulic Steering System (EHPS)

CHANGCHUN HUALONG AUTO CHANGCHUN HUALONG AUTO DEVELOPMENT CO., LTD.DEVELOPMENT CO., LTD.Main focus:

Steering Sys.Material Testing

HENGLONG TECHNOLOGY CENTERHENGLONG TECHNOLOGY CENTERMain focus:

Steering SystemTechnology ImprovementResearch and Using New

Material / Techniques

TSINGHUA HENGLONG AUTO TSINGHUA HENGLONG AUTO PARTS RESEARCH CENTERPARTS RESEARCH CENTERMain focus:

EPS Research

Market Opportunity

– China’s Automobile Market – A Growing Powerhouse • China is currently the world’s third largest automotive market• Demand for cars & trucks has more than doubled since 1998• China is positioned to become the world’s leading purchaser of cars, parts and accessories over the next five to ten years.• The Chinese auto industry is expected to grow at an annual growth rate of 10% to 15%, with the output of automobiles predicted to hit 8 million vehicles in 2010.• The annual growth of both total vehicle output and sales in China in 2003 and 2002 exceeded 30%, with passenger car output and sales jumping by more than 50%. • In 2004, output of domestic vehicles broke 5 million units for the first time, up 14.1% year-over-year.• According to the China Association of Automobile Manufactures (CAAM), the domestic auto market is expected to witness more moderate growth in 2005 versus 2004 with total vehicle output and sales expected to rise 10% to 5.6 million units.• The export market for Chinese-made automotive parts is growing rapidly

Market Drivers

Rapid Economic Growth– According to the Asian Development Bank Key Indicators 2004,

China’s GDP growth averaged 9% per year from 1983 to 2003.– Per Capita GDP increased from $585 in 1995 to $1,093 in 2003.– Currently China ranks as the world’s 6th largest economy.

Highway Development – In 2004, China invested approximately RMB 500 billion on highway

development, up 21.2% from 2003– China State Council has approved the “National Expressway Network

Plan”Growing Export Market– Low manufacturing costs– Improving technology

China Automotive’s Roadmap

Mission– To be recognized as the industry leader and supplier of choice for

innovative automotive components and systemsFive Key Growth Strategies– Expand business in domestic market and accelerate international

expansion– Focus on continuous improvement in production efficiency and

quality– Develop innovative world-class products through technology and

R&D efforts– Increase production capacity and introduce new products through

acquisition both in China and abroad.– Achieve total customer satisfaction

Market Opportunities

China has the world’s third largest automotive market

Demand for cars & trucks has more than doubled since 1998

Rapid growth of export market for Chinese-made automotive parts

China is positioned to become the world’s leading purchaser of cars, parts and accessories over the next five to ten years

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Financial Overview - Net Sales

Approximately 400% growth in net sales over last five years.

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Integral 40633 95000 157487 230811

R& P 41878 115000 231034 178811

Manual 8298 10000 11500 37104

Column 35439 80000 120000 91747

Pump 0 1000 16813 94881

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Financial Overview -Historical Unit Sales Growth

Financial Overview – Balance SheetAll numbers in USD thousands

PERIOD ENDING 31-Dec-04 31-Dec-03AssetsCurrent Assets

Cash And Cash Equivalents 13,007 12,003Net Receivables 41,519 48,660Inventory 12,508 10,229

Total Current Assets 67,034 70,893Long Term Investments 2,116 2,385Property Plant and Equipment 35,944 22,350Intangible Assets 393 219Total Assets 105,487 95,847LiabilitiesCurrent Liabilities

Accounts Payable 41,738 39,198Short/Current Long Term Debt 13,614 9,639Other Current Liabilities 227 2,112

Total Current Liabilities 55,580 50,949Long Term Debt 196 -Other Liabilities - 197Minority Interest 17,572 18,687Total Liabilities 73,348 69,832Stockholders' Equity Common Stock 2 2Retained Earnings 14,130 7,237Capital Surplus 18,003 18,780Other Stockholder Equity 3 (4)Total Stockholder Equity 32,138 26,015Net Tangible Assets $31,746 $25,796

Key Executives

Hanlin Chen - chairman, president and chief executive officer, Mr. Chen has served as a chairman and chief executive since March 2003. He is a standing board member of the Political Consulting Committee of Jingzhou City and vice president of the Foreign Investors Association of Hubei Province. He served as the general manager of Jiulongfrom 1993 to 1997. Since 1997, he has served as chairman of the board of Henglong. Mr. Chen earned a Masters of Business Administration degree from Barrington University.Qizhou Wu - chief operating officer& director, Mr. Wu served as managing vice general manager of Jiulong from 1993 to 1999 and general manager of Henglong from 1999 to 2002. He earned a Masters degree in automobile engineering from Tsinghua University in Beijing.Daming Hu – chief financial officer, Mr. Hu has been responsible for corporate accounting, reporting and tax planning since March 2003. He was the finance manager of Jiulong since 1996 to 1999 and finance manager of Henglong from 1999 to2002.Andy Yiu Wong Tse has served as Sr. VP and director of the Company since March 2003. He has also served as the general manager of the Henglong and Jiulong joint ventures and the chairman of the board of Shenyang since 2003. He was the vice GM of Jiulong from 1993 to 1997 and the vice GM of Henglong. Mr. Tse has over 10 years of experience in automotive parts sales and strategic development. Mr. Tse has an MBA from the China People University.

Investment Summary

Rapidly expanding Chinese economy

Strong consumer demand for automobiles

Leadership position as supplier of power steering systems with highly respected core products

Ability to leverage existing infrastructure to expand productioncapacity

Opportunities for product line expansion and complementary acquisitions

Export product potential

Aggressive research and development programs and strong relationships with leading universities in China

Solid financial position