China Automotive Systems today announced, on March 31, it entered into the final definitive agreement with Hubei Wanlong Investment Co. ("Hubei") to acquire an additional 35.5% of Henglong Automotive Parts Company ("Henglong") to increase its total ownership to 80%. This 35.5% ownership of Henglong alone represented more than US$ 5 million of net earnings in 2007.

In 2007, Henglong posted net income of USD$ 14 million. Henglong, formerly 44.5% owned by China Automotive Systems prior to this acquisition, is engaged in manufacturing power steering systems and components for China's rapidly growing passenger vehicle market. Henglong's main customers are among China's leading automobile manufacturers and include Chery Auto, Brilliance Auto, BYD Auto, Geely Auto and FAW Volkswagen.

The purchase price of the acquisition will be approximately US$ 32.1 million. The payment will consist of US$ 10 million in cash with the remaining value to be paid in 3,023,542 shares of China Automotive Systems common stock valued at 7.3060 per share. At the closing, 1,170,000 shares of China Automotive Systems' common stock will be issued and the remaining 1,853,542 will be issued in accordance with applicable NASDAQ requirements. The agreement is subject to local government authority's final examination and approvals.

Mr. Hanlin Chen, Chairman of China Automotive Systems, stated, "We are very excited about the growth opportunities before us to fulfill our goal to become a global power steering powerhouse in the future. We have delivered what we promised to our shareholders on this acquisition by increasing our ownership in Henglong and immediately consolidating more profit into China Automotive Systems. With this acquisition, we continue to strengthen China Automotive Systems' earnings, net margin and shareholders' value."

Mr. Jie Li, Chief Financial Officer of China Automotive Systems, stated, "This transaction will be immediately accretive to net earnings. The value of Henglong's 35.5% earnings we acquired would have resulted in increasing our 2007 diluted earnings per share to US$0.51from US$0.37, even after adjusting for the additional 3,023,542 shares to be issued."