Investor Presentation

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Power-steering Chinese Automotive Industry

• Investor Presentation
• September 2009

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Safe Harbor Statement

• This presentation 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 and financial performance and
  condition. 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 impact of competitive products,
  pricing and new technology changes in consumer
  preferences and tastes and effectiveness of
  marketing changes in laws and regulations
  fluctuations in costs of production, and other
  factors as those discussed in the Company's
  reports filed with the Securities and Exchange
  Commission from time to time.

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Introduction to CAAS
Who We Are
Key Milestones
1993 Established Jiulong to produce
Integral Power Steering Gear in Heavy-duty
vehicles 1997 Established Henglong to
produce Rack and Pinion Steering Gear in
passenger vehicles 2001 Signed licensing
agreement with Bishop Steering for automotive
power steering valve technology 2002
Established JV Zhejiang to produce steering pump
and JV Shengyang with Brilliance Auto 2003
Signed licensing agreement with NamYang 2004
Listed on NASDAQ Small Cap
Selected as Exclusive Supplier for Steering Pumps
for GM Joint Venture in China 2005 Signed
Licensing Agreement with Korea Delphi 2006
Formed JV with Chery Auto
Established JV to produce Electric Power Steering
(EPS) 2007 Launched Detroit office to
develop NA business Won supplier
contract from FAW-Volkswagen 2008 Won
first supplier contact with global N.American
OEM Won supplier contracts with
ChangAn Auto and Dongfeng Peugeot Citroen
Sold record 1.3 million units

China Automotive Systems is the largest
independent supplier of power steering components
and systems in China. Its subsidiary groups offer
a full range of auto parts incorporated into
steering systems for both passenger automobiles
and commercial vehicles.
Investment Highlights

• 1 market share in commercial vehicle
• 2 market share in passenger vehicle
• Key supplier to many top 10 auto makers
• Increasing number of supplier contracts with
  Sino-foreign JVs
• Strong RD, high quality and low cost
• 100 sales to China domestic market

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Our Products

• The companys product offering encompasses a full
  range of auto parts which are incorporated into
  steering systems for both passenger automobiles
  and commercial vehicles.
• The company currently offers four separate series
  of power steering sets and over 300 models of
  power steering and manual steering sets, steering
  columns, steering oil pumps, and steering hoses.

Steering Column
Steering Pumps
Rack Pinion Power Steering Gears
Steering Hoses
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Fast Growing Chinese Auto Market

• Beginning in 2009, China becomes the worlds
  largest auto nation
• Auto penetration in China is still currently at
  low single digit, compared with the 60
  penetration in US, Europe, and Japan
• Rising demand from low-to-mid income families
  whose purchasing power has increased with falling
  car prices
• In 2008, China auto parts sales increased by 32
  YoY, compared with 40 in 2007.
• Auto part exports were 35.01bn in 2008,
  accounting 70 of total value of auto exports.
  (CAAM)

China domestic auto market (million
units) 2001-2008 CAGR 22

• Source CAAM
• 70 million total passenger vehicles as of June
  20091

• (1)Source China, Ministry of Public Security.
  (2) Investment Report of China Auto Auto Parts
  Industry, 2000-2008
• (3) China auto Parts Industry Report 2007-2008,
  (4)AlixPartners Study Feb 08 Analysis of China
  Auto Parts Market 2008-2009

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Leading Competitive Position

• CAAS is the largest independent supplier of power
  steering components and systems in China
• China has over 100 automakers. There are only 30
  power steering system suppliers in China.
• Safety related components High barrier of entry
• Major competitors, Shanghai ZF and FKS, are
  captive suppliers to specific JV automakers
  Volkswagen, GM, Toyota, Honda etc.

Source Company estimates, 2007, ZF is a JV of
Shanghai auto and ZF Friedrichshafen AG
CAAS is able to innovate and introduce new
products and manage costs much more nimbly than
its state-owned or foreign JV competitors.
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Competitive Strength
CAAS is well positioned to take advantage of the
fast growing China auto parts market opportunity

• 200 engineers 3 technology and RD centers
• 27 Chinese patents 4 trademarks
• Partner with Bishop Steering Technology, Namyang,
  Korea Delphi Automotive Systems and Tsinghua
  University

Strong Technology and RD Capabilities

• Independent supplier
• Quick turnaround on new platform development
• CAAS 3 months vs Competitors 6-9 months
• Approximately 30 sedan makers in China have
  produced nearly 70 sedan models Chinese OEMs are
  demanding fast product cycles

Rapid Product Introduction

• Offers the most comprehensive range of steering
  systems in both passenger and commercial vehicles
• 4 separate series of power steering sets and over
  300 various models
• Most domestic competitors have less than half of
  CAAS product range

Breadth of Product Portfolio

• Labor cost control
• Raw material cost control
• Inventory management
• Manufacturing expense control

Cost Control
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Solution Strong Cost Management
Cost pressures will continue as the ASPs of autos
decline in China
Only suppliers with effective cost control
measures can continue to maintain margins

• CAAS Cost Management Measurement
• Continued technological innovations
• Reduce overall manufacturing and processing cost
  developed through in-house RD advancements
• Reduce the cost of raw materials
• Volume purchase of major raw materials through a
  bidding process
• Optimize product design to reduce the raw
  material wastage in the process of production
• Reduce manufacturing expenses
• Improve productivity of current labor hours
  through more efficient use of the new equipment
• (Over USD 20M spent on high grade equipment in
  the past 3 years)
• Set targets to control manufacturing overhead

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Main Customers

• More than 50 customers
• Revenue contribution from Passenger vehicle
  accounted 66 in 2008
• None of customers accounts for more than 20 of
  total revenue
• Signature western brands FAW-Volkswagen,
  Dongfeng Peugeot, GM Wuling

Driving Force passenger vehicle products
Unit millions
Source company analysis FY 2008
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2008 Passenger Vehicle summary

• Decelerating growth, 6.8M cars sold, up
  7.3
• EU-US
• Market leader VW growth slowed to 12.5
• Runner-up GM unit sales increased by 6.1
• Peugeot declined 6.2 YoY
• JPN-KRN
• FAW Toyota unit sales up by 17 YoY
• Hyundai posted a strong 27.4 YoY growth
• Nissan demonstrated over 20 YoY growth
• Chinese
• Home-grown brands occupied 26 market
• 2008 is a transition year for Chinese brands
• Chery, Geely unit sales growth slowed
• Winner BYD grew 77

Market share by brand origin in 2008
Source CAAM, China Daily, GM.com, Gasgoo.com
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2008 Commercial Vehicle summary

• Post- Euro III Standards
• Overall demand growth slowed 14.1 YoY growth
• Nearly 477,000 heavy trucks sold and 943,516
  light duty truck sold
• Heavy and medium duty growth slowed, but light
  truck continue to climb
• Futon has 29 of light duty truck market and 15
  of total truck market in China
• Local brands dominated 90 heavy duty market.
  Sinotruk Top 5 globally

• Sales by units

• 2008 sales

Breakdown truck unit sales, by type
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Source CAAM, company analysis
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Government Policies in 09

• Stimulus packages
• Since Jan, tax reduction to 5 for 1.6L engine
  vehicles
• Subsidies to Agricultural market RMB 5 billion
• Since Aug, subsidies to replace older, polluting
  vehicles with National IV
• NDRC raised fuel price in Sept
• Gasoline up from RMB 0.22 to 0.26 per liter
• Diesel increased by RMB 300 per ton
• Further financial support to intermediates
• CBRC allows auto lease and auto financing
  companies to issue bonds
• More stringent emission standard by SEPA
• Nationwide implementation of vehicle emission
  certificate since Oct
• Ban yellow sticker (non-compliance) vehicles
  become regulate targets
• Accepted WTO ruling to abolish 25 tax on some
  imported auto parts
• Revitalizes CKD market

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2009 1H Highlights
3 tier markets

• Mini and small car registration, up 24
• Coastal-Central-West markets
• Mini and small car sales up 15, 28 and 36 YoY,
  respectively
• Volume by Origin
• Mini and small car Chinese National up 52, US
  27, Japan down 18, European up 8
• Overall auto market
• Overall Passenger vehicles increased 26 YoY
• Overall Commercial vehicle down 1 YoY

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Source CAAM, China Daily, GM.com, Gasgoo.com,
Four-in
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Growth Strategy
International Market
Domestic Market

• Accelerate international expansion through direct
  sales and partnerships
• Continue to develop relationships with top tier
  international automotive OEMs and component
  manufacturers
• Search for good acquisition targets with solid
  distribution channels
• Build channel relationships to capture
  aftermarket opportunity
• Establish international office to pursue business
  development and RD

• Grow market share in China by partnering with
  fast growing OEMs
• Penetrate existing clients different lines of
  products
• Approach low margin foreign brands who import
  parts
• Focus on continuous improvement in production
  efficiency and quality
• Expand production to meet growing demand
• Introduce new products through RD

Benefits of Electric Power Steering fuel
efficient, environmental friendly and higher
margin
Main goal developing relationships and winning
contracts in US and Europe
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Robust Organic Revenue Growth

• Top line grew 370 over the last 7 years all
  organic growth
• CAGR 21 between 2002 and 2008
• Revenue growth continued in 2008 despite the
  economic downturn

YoY 22
USD millions
USD millions
FY04-08 CAGR 21
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Driving Bottom-line Growth
USD millions
USD millions
YoY 22
YoY 39
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Q2 2009 Summary

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Balance Sheet
( in thousands)
06/30/2009
12/31/2008
Cash
39,555
37,113
Accounts and Notes Receivable
96,425
121,466
Inventories
26,572
26,754
Property and Equipment, Net
51,979
56,117

Total Assets
263,608
231,047
Accounts and Notes Payable
78,913
59,246
Bank Loan
8,782
7,316
Minority Interest
24,188
23,223
Total Liabilities
149,840
126,494
Total Shareholders Equity
104,553
113,768
Free-Cash-Flow in the first half of 2009 USD 8
Million
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Investment Highlights

• China is the worlds largest car market
• Fast growing China auto parts industry
• High barrier of entry to the safety related
  components
• Leading market share
• Diversified customer base
• Key supplier to Chinese home-grown auto makers
• High quality products, strong RD and competitive
  pricing
• Well positioned for potential export
  opportunities

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• Thank You!
• investors_at_caasauto.com
• www.caasauto.com

Power-steering Chinese Automotive Industry