China Automotive Systems announces pending acquisition of Henglong Automotive Parts Company

China Automotive Systems, Inc. (CAS) has entered negotiations with the Hubei Wanlong Investment Co. to acquire an additional 36.5 percent of Henlong Automotive Parts Company. If both parties agree to the transaction, CAS will own 81 percent of Henlong, which manufactures power steering systems and components for China's passenger vehicle market.

Henglong is currently 44.5 percent owned by China Automotive Systems. The company's main customers include Chery Auto, BYD Auto, Geely Auto and FAW Volkswagen. In 2006, Henglong posted sales of USD$54.54 million, representing 57 percent of China Automotive Systems' total net sales, and net profit of USD$9.75 million, while CAS' net profit was USD$4.81 million.

"We are very pleased to take this step to consolidate our fastest-growing subsidiary to enhance value for our shareholders," says Jie Li, the company's chief financial officer. "A special acquisition committee continues its discussion with Henglong's minority shareholder as we are working to roll this key minority stake into our public company. This step further demonstrates our commitment to be a power steering leader and participate in the rapid growth of the passenger vehicle market in China."

The special acquisition committee, consisting of three China Automotive Systems' independent directors, has been formed to evaluate and facilitate the final transaction. The special acquisition committee is evaluating appraisal firms and financial advisers to assist it. Management expects the acquisition may be completed in the first quarter of 2008.

For more information about China Automotive Systems, Inc., visit the company's Web site.