China Automotive Systems, Inc. (NASDAQ:CAAS) today announced 2008 first quarter results for the period ended March 31, 2008.

China Automotive reported net sales of US$41.5 million for the first quarter ended March 31, 2008 compared with US$28.4 million in the same period in 2007, and US$37.7 million for the fourth quarter of 2007, reflecting a 46.1% year-over-year growth and a 10.1% quarter-over-quarter growth, respectively. Net income for the first quarter of 2008 was US$4.4 million, as compared to US$1.6 million in the same period of 2007 and US$2.2 million in the fourth quarter of 2007, reflecting a 169.6% year-over-year increase and 104.8% quarter-over-quarter increase, respectively. Fully diluted earnings per share for the first quarter of 2008 were US$0.18 per diluted share, as compared to US$0.07 for the same period a year ago and US$0.09 for the fourth quarter of 2007.

First quarter net sales for 2008 from steering products for passenger and light-duty vehicles increased to US$30.2 million as compared with US$21 million reported in the same period for 2007, reflecting a 44% year-over-year growth. First quarter net sales from steering products for commercial vehicles increased to US$11.3 million as compared with US$7.4 million reported in the same quarter for 2007, reflecting a 51.9% year-over-year growth.

Mr. Qizhou Wu, Chief Executive Officer of China Automotive Systems, commented, "We are excited to report a strong quarter witnessed by the high sales volume growth in particular from the accelerating sales in the commercial vehicle sector due to the forthcoming nationwide Euro III adoption. We are equally pleased with our strong growth momentum in the passenger vehicle sector, as our brand name, quality and service, and production capacity have been widely recognized by leading sino-foreign joint venture auto OEMs and Chinese national automakers in China. As global purchasing trend is upgrading from low-cost-high-volume to high-quality-high-technology, China Automotive Systems is well positioned for the broad market opportunities in the global market.''

Gross profit for the first quarter of 2008 increased to US$12.2 million compared with US$9.2 million in the same period for 2007, and US$12.7 million for the fourth quarter of 2007, reflecting a 32.9% increase year-over-year and a slight decline quarter-over- quarter growth, respectively. Gross margin declined to 29.5% from 32.4% in the first quarter a year ago due to higher material cost. The Company's research and development team is revising production techniques to reduce material waste and improve production efficiency, and price increase negotiations are underway. The annual gross margin goal is to achieve not less than 30%.

Operating income for the first quarter of 2008 was US$6.8 million, compared with US$5.2 million reported in the same period of 2007, and US$3.5 million for the fourth quarter of 2007, reflecting a 30.8% increase year-over-year and a 114.2% increase quarter-over-quarter, respectively. Operating margin for the first quarter of 2008 reached 16.4%.

Operating expenses in the first quarter of 2008 were US$5.6 million compared with US$4.1 million in the same quarter in 2007 and US$9.4 million in the fourth quarter of 2007. Selling expenses rose 55.3% to US$2.5 million from US$1.6 million in the same quarter last year due to higher sales and the related increase in warranty costs as well as higher transportation expenses. Depreciation rose by US$401,747 from US$ 0.9 million to US$1.3 million primarily due to the increased equipment in operation. General and administrative expenses in the 2008 first quarter were US$1.6 million, 7.1% higher versus the same quarter last year primarily because of greater labor insurance expenses.

Higher Other Income grew from increased government subsidies. There was also a positive swing in financial income from a negative US$394,997 to a positive US$20,693 due to changes in currency exchange and amortization for the discount of the US$35 million convertible notes.