China Automotive Systems Signs Letter of Intent to Acquire 36.5% of Jingzhou Henglong...

China Automotive Systems Signs Letter of Intent to Acquire 36.5% of Jingzhou
Henglong Automotive Parts Co., Ltd.
-- Intends to Acquire at Approximately 7 Times 36.5% of Henglong's 2007
Earnings --

WUHAN, Hubei, China, Jan. 22 /Xinhua-PRNewswire-FirstCall/ -- China
Automotive Systems, Inc. (Nasdaq: CAAS), a leading power steering components
and systems supplier in China, today announced it has entered into a Letter Of
Intent (LOI) with Hubei Wanlong Investment Co. ("Hubei") to acquire an
additional 36.5% of Jingzhou Henglong Automotive Parts Co., Ltd. ("Henglong").
The purchase price of the acquisition will be approximately US$ 33
million.
The payment will consist of US$ 10 million in cash with the remaining value to
be paid in the common stock of China Automotive Systems at approximately US$
7.20 per share, which is the Volume Weighted Average Price (VWAP) based on the
prior 20 trading days before the signing of this LOI. Upon closing, the
acquisition will be valued at approximately 7 times 36.5% of Henglong's 2007
net earnings. An independent asset appraiser will conduct an evaluation to
assist the closing of the acquisition. The final transaction price will be
based upon the appraiser's findings and the closing is subject to the special
committee's final approval.
Henglong, currently 44.5% owned by China Automotive Systems, is engaged in
manufacturing power steering systems and components for China's rapidly
growing passenger vehicle market. Henglong's main customers include Chery
Auto, Brilliance Auto, BYD Auto, Geely Auto and FAW Volkswagen. In the first
nine months of 2007, Henglong posted sales of US$ 54.3 million, representing
56.6% of China Automotive Systems' total net sales and net profit of US$ 11.1
million, while CAAS' net profit was US$ 6.7 million. Management expects that
the acquisition will be immediately accretive to net earnings.
Mr. Hanlin Chen, the Chairman of China Automotive Systems, is also the
controlling shareholder of Hubei, which is a 36.5% minority shareholder of
Henglong. Upon completion of the proposed acquisition, China Automotive
Systems will increase its total ownership in Henglong to 81%. Once the
acquisition is completed, Mr. Chen, the Chairman of China Automotive Systems,
and other management also will have increased their ownership of the Company's
stock.
Mr. Hanlin Chen, Chairman of China Automotive Systems, stated, "We are
very excited about the growth opportunities of our power steering products
domestically and internationally. The growth prospects before China
Automotive Systems makes the consolidation of the minority stake in Henglong
very attractive. Within 5 years, we plan to build China Automotive Systems
into a global power steering powerhouse."
Mr. Jie Li, Chief Financial Officer of China Automotive Systems, stated,
"We welcome the minority shareholders' interest in joining forces with our
fast-growing public company. We share the same vision and are planning to
combine our internal resources to create economies-of-scale that will
strengthen China Automotive Systems' earnings and shareholders' value. We are
aiming to close the acquisition within the first quarter of 2008."
About CAAS
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 seven Sino-foreign joint
ventures. The Company offers a full range of steering system parts for
passenger automobiles and commercial vehicles. The Company currently offers 4
separate series of power steering and 307 models of power steering with an
annual production capacity of 1.1 million sets, steering columns, steering oil
pumps and steering hoses. Its customer base is comprised 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 .
Safe Harbor Statement
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based on current expectations or beliefs, including, but not
limited to, statements concerning the Company's operations, financial
performance and condition, and the impact of this acquisition on its financial
performance. For this purpose, statements that are not statements of
historical fact may be deemed to be forward-looking statements. The Company
cautions that these statements by their nature involve risks and
uncertainties,
and actual results may differ materially depending on a variety of important
factors, including, among others, the risk that the acquisition of Henglong's
36.5% minority share will not be completed. or that if completed it won't be
successful, the impact of competitive products, pricing and new technology;
changes in demand for the Company's products; changes in consumer preferences
and tastes; and effectiveness of marketing; changes in laws and regulations;
fluctuations in costs of production, delays and cost overruns related to
developing and opening new production facilities; and other factors as those
discussed in the Company's reports filed with the Securities and Exchange
Commission from time to time.
For further information, please contact:

Jie Li
Chief Financial Officer
China Automotive Systems
Email: jieli@chl.com.cn

Kevin Theiss
Investor Relations
The Global Consulting Group
Tel: +1-646-284-9409
Email: ktheiss@hfgcg.com

Stacy Dimakakos
Financial Media Relations
The Global Consulting Group
Tel: +1-646-284-9417
Email: sdimakakos@hfgcg.com

SOURCE China Automotive Systems, Inc.

Jie Li, Chief Financial Officer of China Automotive Systems, jieli@chl.com.cn;
or Kevin Theiss of Investor Relations, +1-646-284-9409, or ktheiss@hfgcg.com;
or Stacy Dimakakos of Financial Media Relations, +1-646- 284-9417, or
sdimakakos@hfgcg.com, both of The Global Consulting Group, for China
Automotive Systems, Inc.