Roth Capital 2006 New York Conference Investor Presentation

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• Roth Capital 2006 New York ConferenceInvestor
  Presentation
• September 2006

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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
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.
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 Completed US listing
through a reverse merger 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
Formed JV with Sensor System Solutions to
produce sensors used in electronic control
systems for vehicles Annual sales
reached 500,000 units 2006 Formed JV with
Chery Auto Received VW supplier
code and began road test
Established JV to produce Electric Power Steering
(EPS)
Investment Highlights
1 market share in commercial vehicle 2 market
share in passenger vehicle Key supplier to Chery
and Geely Auto Strong RD, high quality and low
cost Solid relationships with large local
OEMs 100 domestic sales in fast growing mkt
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Corporate Structure
China Automotive Systems, Inc.
100
Great Genesis Holdings Limited
100
Ji Long Enterprise Investment Limited
44.5
81
70
51
77
Jingzhou Henglong Automotive Parts Co. Limited
(Henglong)
Shashi Jiulong Power Steering Co. Limited
(Jiulong)
Shenyang Jinbei Henglong Automotive Steering
System Co. Limited (Shenyang)
Zhejiang Henglong Vie Pump-Manu Co. Limited
(Zhejiang)
Wuhu Henglong Auto Steering Systems (''WHAS')

• Employees 218
• Products
• RP Power Steering Gears
• RP Manual Steering Gears
• 2005 units 83K
• 2005 revenues 11M
• 2005 rev. contribution 17

• Employees 209
• Products
• Power Steering Pumps
• 2005 units 170K
• 2005 revenues 6M
• 2005 rev. contribution 9

• Employees 830
• Products
• Power Steering Gears
• Steering Column
• Steering Hoses
• 2005 Units 218K
• 2005 revenues 35M
• 2005 rev. contribution 53

• Employees 700
• Products
• Power Steering Systems in heavy duty vehicles
• 2005 Units 199K
• 2005 revenues 22M
• 2005 rev. contribution 35

• Product Power steering systems for passenger
  vehicle
• Expect to complete facility construction in 2007
• Total production capacity of 300,000 sets

Include internal sales(11 million, accounting
for 18 of net sales
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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 Passenger Vehicle Market

• In 2005, China became the worlds second largest
  car market, after US only.
• Auto penetration in China is currently at only
  2, compared with the 50-60 penetration in US,
  Europe, and Japan.
• sharply rising demand from low-to-mid income
  families whose purchasing power has increased
  with falling car prices
• China's auto parts sales reached 43bn in 2005
  and the sales units for domestic auto parts are
  expected to grow 15 annually in the next 5
  years, compared to just 3 in North America.
• Current estimates project China vehicle and parts
  exports to grow from US9.6bn in 2004 to US40bn
  in 2010 or an annual growth rate of approximately
  20.

China domestic auto market (million
units) 2001-2010 CAGR 17
Source Goldman Sachs equity research, CAAM
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Strong Demand for Domestic China Auto Parts
Strong Demand for Chinese Auto Parts

• Stable Growth of Chinas Auto Industry
• Auto parts unit sales to OEMs are expected to
  grow 15 annually in the next 5 years
• Aftermarket support auto parts unit sales are
  expected to grow 18 annually in the next 5 years

• Favorable Government Policy
• To protect auto parts companies in China, the
  government requires auto makers in China to reach
  the local content ratio of minimum 40 in the
  first year and 60 in the second year after
  incorporation
• the revival of the auto
• loan among commercial banks in 2007

• Fast Growing Exports
• Chinese auto parts exports are expected to
  increase 20 annually in the next 5 years
• Large US auto companies (e.g. GM and Ford) have
  announced outsourcing programs for China
  component companies

Source Goldman Sachs, Zuosi Research, China
Automobile Industry Policy. Sales growth
estimates measured in units.
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Leading Competitive Position

• China Automotive is the largest independent
  supplier of power steering components and systems
  to the Chinese automotive industry
• China has over 100 automakers. The power steering
  system market is fragmented in China
• The Company's major competitors, Shanghai ZF and
  FKS, are component suppliers to specific
  automobile manufacturers

Source Company estimates, August 2006
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
• 12 Chinese patents 2 trademarks
• Spends 25-30 of its net sales of new products
  on RD in 2004
• Partner with Bishop Steering Technology, Namyang,
  Korea Delphi Automotive Systems and Tsinghua
  University

Strong Technology and RD Capabilities

• Since CAAS is not dependent on any one automotive
  OEM, the company has the ability to quickly
  develop and introduce products for new vehicle
  platforms the Company can typically develop new
  platforms in 3 months as opposed to the normal
  6-9 months its competitors need
• 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 of power steering and manual
  steering products. Most domestic competitors
  have less than half in terms of product portfolio
  breadth

Breadth of Product Portfolio

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

Cost Control
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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 labor cost
• Reduce non-operative employees
• Reduce the cost of raw materials
• Volume purchase of major raw materials through a
  bidding process
• Optimize product design to reduce the weight of
  component parts and wastage in the process of
  production
• Reduce manufacturing expenses
• Improve productivity of current labor hours
  through more efficient use of the new equipment
• Set targets to control manufacturing overhead

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Main Customers

• More than 50 customers
• The top 10 largest customers represent
  approximately 75.3 of total sales in 1H2006
• Revenue contribution from Passenger vehicle
  increases to approximately 75 in 2006

Source company analysis
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Key Customer Profiles
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1H06 Passenger Vehicle summary

• Strong sales growth, 1.8 million cars sold, 47
  increase YoY
• Foreign names (VW and GM) maintained leadership
• Local brands (Chery, Geely and Brilliance) posted
  stronger growth
• Home grown economy cars are gaining traction

05 market share by brand origin
Source Goldman Sachs, CAAM
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Expanding Our Revenue Model
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

• Grow market share in China by partnering with
  fast growing OEM
• 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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1H06 Commercial Vehicle summary

• Demand is recovering Monthly sales show healthy
  growth
• Local brands remain dominant 90 market share in
  China
• Heavy duty truck export rises 170 YoY in 05 and
  270 QoQ in Q1-06

Source UBS equity research, Goldman Sachs
equity research, company analysis
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2H06 Outlook

• Passenger Vehicle growth outlook remains healthy
• Credit tightening policy has less impact
• Auto loan accounted for 10 of total purchase
  in 05
• Sedan Inventory level remain reasonable
• May end inventory is 6 Jan-May06 total output
• Local brands continue to grow market share
• Flexibility and quick adapt to consumer taste and
  affordability
• China is preparing to become a net car exporter
  in 2007
• Commercial Vehicle market in favor of further
  recovery
• Booming tourism and intra-city transportation
• Highway expansion by 38 during 2006-2010
• (Chinese government 11th Five-Year Plan
  Period)
• The Ministry of Construction plans to complete
  arterial national highways network by 2008
• Trucks increasing role in solving logistic
  bottleneck
• Enforcement of Euro III standard likely boosts
  sales head of 2007

Source UBS equity research, Goldman Sachs
research
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Solid Revenue Growth

• Approximately 150 growth in net sales over the
  last five years
• CAGR 25 between 2001 and 2005
• Maintain strong growth momentum in the recent 10
  quarters

Net sales 2001-2005 in USD millions
Net sales in past 10 quarters in USD millions
FY01-05 CAGR 25
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High Profit Margins
Gross Margin
Operating Margin
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Balance Sheet
( in thousands)
Cash
Accounts and Notes Receivable
Inventories
Property and Equipment, Net
Long Term Investments
Total Assets
Accounts and Notes Payable
Bank Loan
Minority Interest
Total Liabilities
Total Shareholders Equity
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Investment Highlights

• China is the worlds second largest auto market
• Fast growing China auto parts industry
• Leading market share
• Diversified customer base
• Key supplier to Chery and Geely Auto
• High quality products, strong RD and low price
• Well positioned for potential export
  opportunities

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