SORL Auto Parts, Inc.NASDAQ: SORLSORL Auto Parts, Inc.NASDAQ: SORL

Investor Presentation Investor Presentation April 2006April 2006

Safe Harbor StatementSafe Harbor Statement

This presentation contains "forward-looking statements" within the meaning of

the “safe-harbor” provisions of the Private Securities Litigation Reform Act of

1995. Such statements involve known and unknown risks, uncertainties and

other factors that could cause the actual results of the Company to differ

materially from the results expressed or implied by such statements, including

changes from anticipated levels of sales, future national or regional economic

and competitive conditions, changes in relationships with customers, access

to capital, difficulties in developing and marketing new products, marketing

existing products, customer acceptance of existing and new products, and

other factors. Accordingly, although the Company believes that the

expectations reflected in such forward-looking statements are reasonable,

there can be no assurance that such expectations will prove to be correct.

The Company has no obligation to update the forward-looking information

contained in this presentation.

Corporate ProfileCorporate Profile

Leading manufacturer of air brake valves for commercial Leading manufacturer of air brake valves for commercial vehicles in Chinavehicles in China

• Spin-off from Ruili Group which was established in 1987

• Revenue $47 million in 2004; $64 million in 2005

• Based in Wenzhou City, Zhejiang Province – the “Hub of auto parts” in Chinathe “Hub of auto parts” in China– major highway to reach Shanghai within 5 hoursmajor highway to reach Shanghai within 5 hours

• 1295 employees

Market Data and ValuationMarket Data and Valuation

Stock Price (Feb 10, 2006):Stock Price (Feb 10, 2006):

Shares Outstanding: Shares Outstanding:

Shares in Float:Shares in Float:

Market Cap:Market Cap:

Enterprise Value (EV):Enterprise Value (EV):

P/E (’05):P/E (’05):

P/B (‘05):P/B (‘05):

PEG Ratio (’05):PEG Ratio (’05):

EV/Revenue (’05):EV/Revenue (’05):

EV/EBITDA (’05):EV/EBITDA (’05):

$5.75$5.75

13.5M13.5M

0.38M0.38M

$76.48M$76.48M

$87.56M$87.56M

15.5x15.5x

4.6x4.6x

0.5x0.5x

1.4x1.4x

11.4x11.4x

Key Investment HighlightsKey Investment Highlights

• A fast-growing, profitable auto parts manufacturer in coastal China

• No. 1 market share in China of the overall growth in the Chinese auto industry

• Capitalize on its abilities to manufacture at comparatively low costs to increase its international export business

Industry OverviewIndustry Overview

• Auto penetration in China is currently at only 2%, compared with the 50% -60% penetration in US, Europe, and Japan.

• Already the world’s 2nd largest auto market after the U.S. and surpassed Japan in 2005

• Chinese Auto part sales totaled at US$50bn in 2004, expected to be $86 billion by 2010

• Domestic auto part market: US$40bn in 2004

• Growing export market: China vehicle and parts exports to grow from US$10bn in 2004 to US$40bn in 2010 or annual growth rate of 27%

Source: UBS, GM estimates, Zuosi Research, China Auto Association, company estimates

SORL Industry LeadershipSORL Industry Leadership

• No. 1 market share (21%) in heavy-duty vehicle air brake valves in China

• 18% share in the OEM air brake valve segment, ranked No. 1 in China: supplied to OEM customers such as FAW, Dongfeng Motors and Beiqi Foton etc.

• 25% share in the replacement air brake segment, ranked No. 1 in China

• Production in 2005: 7 million units

2005 Industry Summary2005 Industry Summary

Passenger Vehicle: a volatile year that ended stronglyPassenger Vehicle: a volatile year that ended strongly

• Volume growth 24% YoY in 2005

• Auto maker Profit decline 41% YoY

• Revenue increase 13%

• Net margin drops from 6.8% to 4.2%

• 4Q2005 1Mil sedans sold and posted a historical high

Truck market: growth reset with sustainable marginTruck market: growth reset with sustainable margin

• 04 truck volume sales was strong due to gov policy

• 04 volume growth 45% YoY

• Truck sales declined sharply in 2005: 36% YoY drop

• Gov new regulation, continued overloading crack-down

• $142 million Chinese heavy-duty vehicle air brake valve market in 2005

Source: Bear Stern Equity Research, Citigroup Equity Research, CAAM

0

100,000

200,000

300,000

400,000

500,000

2003 2004 2005 2006est

2007est

Heavy Duty Truck Sales in VolumeHeavy Duty Truck Sales in Volume

Heavy Duty Truck MarketHeavy Duty Truck Market

• Annual sales of heavy duty trucks grow CAGR 51% 2000-2004

• Demand to grow 20% p.a. during 2006-2010 to reach 700,000 per year

• High entry barriers with government support

• Imports not as durable as local model due to the harsh road condition, lack of maintenance and low repair skill at local garages

• Export market grows steadilySource: Citigroup Equity Research Sept 2005, CAAM, Credit Suisse Research Jan 2006

2006 Industry Outlook2006 Industry Outlook

Passenger Vehicle: Auto shares around the world started wellPassenger Vehicle: Auto shares around the world started well• China became the main driver of Jan global sedan sales: 60% rise YoY • Strong volume occurred without extensive price discount• Analysts expect price cuts during new car launch season in April and May

to be more moderate • Capacity is still expanding and demand for economy car remains robust• Unanimous forecast of 20% volume growth by Wall Street equity analysts

Truck market: Infrastructure and regulation in favor of Truck market: Infrastructure and regulation in favor of continuous growthcontinuous growth• Heavy truck sales decline has bottomed and recovery could be in 2006• Highway expansion by 38% during 2006-2010 (Chinese government 11th

“Five-Year Plan” Period)• The Ministry of Construction plans to complete its massive network of

arterial national highways by 2008 prior to Beijing Olympics • Trucks’ increasing role in solving logistic bottleneck• Transition to Euro III standard likely boosts E2 truck sales ahead of 2007

Source: Citigroup Equity Research, CAAM, Frost & Sullivan Research - Sept 2005, Feb, 2006, Credit Suisse Research, Jan 2006

Competition LandscapeCompetition Landscape

• Highly fragmented market with over 4,700 registered auto component companies in China

• Customer relationship is the key; Price is not as sensitive as passenger vehicles

• Major domestic competitors – CAFF: state-owned enterprise, older facilities, higher cost CAFF: state-owned enterprise, older facilities, higher cost – Weiming: Sino-foreign JV, higher production cost and lower Weiming: Sino-foreign JV, higher production cost and lower

performance-to-cost ratioperformance-to-cost ratio– VIE: fast-growing private company, no established aftermarket VIE: fast-growing private company, no established aftermarket

sales networksales network

• International competitors– Wabco, Knorr: Both companies’ products primarily for European Wabco, Knorr: Both companies’ products primarily for European

and U.S. vehiclesand U.S. vehicles– On average 2 times more expensiveOn average 2 times more expensive

Competitive AdvantageCompetitive Advantage

Strong Product Portfolio

Extensive Distribution

Solid Management and Relationship

High-quality and continuous R&D

40 categories and 800 specs

Global certifications: ISO/TS16949

27 authorized distributors covering 7 regions

Over 800 sub-distributors nationwide

3 authorized sales centers (Australia, UAE, USA)

Industry-leading management team

Good relationship with large auto makers: FAW and Dongfeng Motors

Major ProductsMajor Products

Four-circuitFour-circuitProtection Protection ValvesValves

Air DryersAir Dryers

Clutch ServosClutch Servos Parking BrakeParking BrakeValvesValves

Spring BrakeSpring BrakeChambers Chambers

Foot Brake Foot Brake ValvesValves

ProductionProduction

• 15 Production/Assembly lines

• State-of-the-art testing facilities

• 270,000 Sq feet production space

• Advanced equipments from US, Korea and Taiwan

• ISO/TS16949 Quality Management System

• OHSAS18001 System

• ISO14001 Environmental Management System

Research & DevelopmentResearch & Development

• Focus on development of new products :– Clutch servo with inductive displacement transducer Clutch servo with inductive displacement transducer – Automatic slack adjusterAutomatic slack adjuster– Loading sense proportion valve Loading sense proportion valve – New Type Foot brake valveNew Type Foot brake valve– Transitioning to electronic controlled air brake valve products.Transitioning to electronic controlled air brake valve products.

• 44 technical staff, including 32 engineers or senior engineers

• 1 patent, 2 licensed patents, 9 pending patent applications, a series of Know-How’s.

• Partnerships with leading automotive engineering institutes:– Beijing Jiaotong UniversityBeijing Jiaotong University– Tsinghua University E-Tech Technology Co., Ltd Tsinghua University E-Tech Technology Co., Ltd – Zhejiang UniversityZhejiang University– Huazhong University of Science and TechnologyHuazhong University of Science and Technology

Balanced Revenue SourcesBalanced Revenue Sources

Rev OEM $21M :: Aftermarket Replacement $20M :: Export $23M

Gross Margin OEM 22% :: Aftermarket 20% :: Export 25%

Replacement32%

Export36%

OEM32%

Asia42%

Australia3%

Americas25%

Africa15%Europe

15%

2005 Export Revenues Breakdown2005 Export Revenues Breakdown

Customers: OEMCustomers: OEM

• 47% of revenue from OEMs in 2004, declined to 32% in 2005 as sales from other segments expanded

• Total 39 OEM manufacturers including all of key truck makers in China

• Solid long-term relationships, with SORL’s five largest customers (also top Chinese truck makers) accounting for 57% of total OEM sales in 2005

• Annual sales contracts are generally signed at the beginning of the year with quarterly review

• Two largest customers, FAW and Dongfeng, accounted for more than 53% of the Chinese total heavy duty truck sales in 2005

Customers: OEMCustomers: OEM

SORL: The major supplier to the major truck SORL: The major supplier to the major truck manufacturers in China manufacturers in China

Auto Makers FAW Qingdao

FAW Jiefang Changchun

Dongfeng Motors

Liuzhou Special Auto

China Nat’l Heavy Duty Truck Group

Heavy Duty Trucks Output (unit)

55,970 71,797 14,000 45,000

Market Share in China 23.7% 30% 5.8% 31.6%

% Valves Supplied by SORL

40% 22% 18% 50% 5%

FAW Qingdao and FAW Jiefang Changchun are the only two heavy truck makers within FAW family

Customers: AftermarketCustomers: Aftermarket

• $12.2 Million in ‘04 to $20.2 Million in ‘05

• 26% of revenue in 2004 to 32% of revenue in 2005

• 27 authorized distributors

• Over 800 sub-distributors

Customers: AftermarketCustomers: Aftermarket

Success factors to win in the intensified Success factors to win in the intensified aftermarket competitionaftermarket competition

Established Nationwide

Sales Network

Close Relationship with Big OEM Manufacturers

Performance-Cost

Competitiveness

Warranty and

ReliabilityTimely

Delivery

Efficient Customer Services

Other Small Manufacturers No No Low Low Poor Poor

SORL Auto Parts Yes Yes High High Good Good

Customers: InternationalCustomers: International

• $12.6 Million in ‘04 to $23.4 Million in ‘05

• 27% of rev in 2004 to 36% of rev in 2005

• Mostly replacement but begin to explore OEM opportunities: TATA Motors

• 3 authorized sales centers (Australia, UAE and USA)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

Country: UAE South Africa Canada Taiwan South Africa Spain USA

YoY Increase:

92% 77% 93% 385% 140% 165% 10%

Customers: InternationalCustomers: International

Top 7 export customers continue to show Top 7 export customers continue to show confidence in SORL product qualityconfidence in SORL product quality

GD Auto MICO FP MITA POLMO Air-Fren KTC

2004

2005

Attractive Export OpportunityAttractive Export Opportunity

• Current commercial vehicle air brake valves market size in the world: over $5 billion

• Growth of aftermarket air brake valves market: approximately 15%

• Global purchase trend: moving to China

Cost ControlCost Control

• Main raw materials: aluminum and steel

• Economies of scale production and production technique optimization

• Down payment to suppliers to secure purchase price in a rising market

• ISO/TS16949 quality assurance system to discipline over 20 suppliers

• Closely monitored inventory management of other raw materials

• Reduction in spoilage

• 39% CAGR of sales during 2003-2005

• 2006 sales from new products projected to increase to 18% of revenue

• 2006 export to reach 40% of revenue, up from 18% in 2003 and 36% in 2005

1.2

4.85.0

33.1

46.8

64.2

Financial HighlightsFinancial Highlights

Net Income GrowthNet Income Growth($millions)($millions)

2003 2004 2005

RevenueRevenue GrowthGrowth($millions)($millions)

2003 2004 2005

Growth StrategyGrowth Strategy

OEM:OEM:

• Enhance brand recognition and develop relationship with other truck makers; cautiously explore opportunities in passenger vehicle domain

Export:Export:

• Strengthen presence overseas by establishing relationships with additional authorized distributors

M&A and JV:M&A and JV:

• Wenzhou is one of most active private economies in China

• Well known for its auto parts specialty in the nation

• Over 1400 auto parts companies can become potential M&A or JV targets

Cost Control:Cost Control:

• Reduce material and energy consumption; strict measurement on waste

• Maintain high standard quality control

Management TeamManagement Team

Xiaoping Zhang, Chairman and CEOXiaoping Zhang, Chairman and CEO

• Co-founder of Ruili Group

• President of the Ruian Auto Parts Association in Wenzhou, Zhejiang Province

• Vice President of China Federation of Industry and Commerce Auto & Motorbike Parts Chamber of Commerce

Xiaofeng Zhang, COOXiaofeng Zhang, COO

• Co-founder of Ruili Group

• Spearheads SORL’s sales and marketing effort

• General Manager of Ruili Group until 2004

Zongyun Zhou, CFOZongyun Zhou, CFO

• Certified Public Accountant in China

• Chief Financial Officer of Shanghai Huhao Auto Parts Manufacturing Company Limited, a joint venture between the Ruili Group and Shanghai Auto Group, 2002 - 2004

David He, Senior Manager of David He, Senior Manager of Investor RelationsInvestor Relations

• Illinois CPA and awarded CFA designation

• Senior Relationship Manager in corporate banking with Credit Agricole Indosuez in Shanghai for 7 years

SummarySummary

• Maintained the No. 1 market share in the Chinese heavy-duty vehicle air brake valve sector

• Projected CAGR of 30% and 27% in sales and earnings from 2005-2008

• Globally recognized ISO/TS16949 certification, high-quality products and rapidly growing export sales

• Heavy-duty vehicle market, driven by China’s rapid economic growth and mass construction, gives SORL a solid ongoing sales base

• Attractive growth opportunities through expansion into international market & domestic sedan market

Investor ContactInvestor Contact

David Ming HeDavid Ming He

Senior Manager, Investor Relations

Phone: +86 (577) 6581 7720

Fax: +86 (577) 6581 7733

Email: davidhe@sorl.com.cn

Web: www.sorl-autoparts.com