China Automotive Systems Reports a 91.7% Increase in Diluted Net Income Per Share in Fiscal Year 2022

- Electric Power Steering ("EPS") Sales Increased by 35.6% in 2022 -

WUHAN,China,March30,2023 -- China Automotive Systems,Inc. (NASDAQ: CAAS) ("CAAS" or the "Company"),a leading power steering components and systems supplier in China,today announced its unaudited financial results for the fourth quarter and the audited results for the fiscal year ended December 31,2022.

Fourth Quarter 2022 Highlights

Net sales were $128.8 million

Gross profit increased by 26.9% to $25.0 million from $19.7 million. Gross margin increased to 19.4% from 14.2% in the fourth quarter of 2021

Loss from operations was $2.6 million,compared to income from operations of $0.6 million in the fourth quarter of 2021

Net income attributable to parent company's common shareholders was approximately $4.3 million,or diluted net income per share of $0.14,compared to net income of $5.0 million,or diluted income per share of $0.16 in the fourth quarter of 2021.

Fiscal Year 2022 Highlights

Net sales increased by 6.3% to $529.6 million compared to $498.0 million in 2021

Gross profit increased by 15.7% to $83.4 million compared to $72.1 million in 2021. Gross margin increased to 15.7% from 14.5% in 2021

Operating income increased by 45.5% to $8.0 million compared to $5.5 million in 2021

Diluted net income per share increased by 91.7% to $0.69 in 2022 compared to $0.36 in 2021

Total cash and cash equivalents,pledged cash and short-term investments were $171.8 million at year end

Net cash flow provided by operating activities was $48.0 million compared to $28.3 million in 2021.

Mr. Qizhou Wu,Chief Executive Officer of CAAS,commented,"The Chinese economy continued to grow slowly with 2.9% year-over-year growth in the fourth quarter of 2022 and 3.0% growth for the full year,down significantly from the 8.4% growth in 2021. COVID-related lockdowns and travel restrictions in China resulted in supply chain disruptions and slowed automobile sales growth in 2022. According to the China Association of Automobile Manufacturers,overall sales of automobiles in China declined by 3.3% year-over-year in the fourth quarter of 2022 and increased by only 2.1% year-over-year for 2022."

"Despite all the challenges,we continued to grow our top and bottom lines in 2022. Our sales in the domestic Chinese passenger market improved and revenue from North America was steady. Sales to Chery Automobile and our Brazilian operations achieved over 50% year-over year sales growth in 2022. Additionally our EPS revenue increased 35.6% year-over-year in 2022."

"Investment in research and development was 28.0% higher as we increased product development for the New Energy Vehicle("NEV") market and autonomous driving programs,such as our expanded relationship with BYD Auto for new customized EPS products and our ongoing collaboration with Sentient AB in Sweden."

"We are cautiously optimistic that recent government policy changes in 2023,which greatly removed COVID-19 lockdowns and travel restrictions,will be a catalyst to boost the business environment in China," Mr. Wu concluded.

Mr. Jie Li,Chief Financial Officer of CAAS,"Our margin continued to improve throughout the year. We maintained our financial strength as total cash and cash equivalents,pledged cash and short-term investments increased to $171.8 million,or approximately $5.69 per share at year end. We enhanced our profitability and generated strong free cashflow in 2022. We repurchased 666,074 common shares in 2022."

Fourth Quarter of 2022

In the fourth quarter of 2022,net sales decreased by 7.2% to $128.8million compared to $138.8 million in the same quarter of 2021. The net sales decrease was mainly due to a change in the product mix and lower demand for passenger automobiles and commercial vehicles in the fourth quarter of 2022 compared to the fourth quarter of 2021.Gross profit increased by 26.9% to $25.0million in the fourth quarter of 2022,compared to $19.7 million in the fourth quarter of 2021. Gross margin in the fourth quarter of 2022 was 19.4% compared to 14.2% in the fourth quarter of 2021,primarily due to a change in product mix.Selling expenses were$4.6 million in the fourth quarter of 2022,compared to $3.4 million in the fourth quarter of 2021. Selling expenses represented 3.6% of net sales in the fourth quarter of 2022,compared to 2.4% in the fourth quarter of 2021.General and administrative expenses ("G&A expenses") were $10.8 million in the fourth quarter of 2022,compared to $7.6 million in the same period in 2021. G&A expenses represented 8.4% of net sales in the fourth quarter of 2022,compared to 5.5% of net sales in the fourth quarter of 2021,which was mainly due to the increase of provision of allowance for doubtful accounts.Research and development expenses ("R&D expenses") were$10.6 million in the fourth quarter of 2022,compared to $9.9 million in the fourth quarter of 2021. R&D expenses represented 8.2% of net sales in the fourth quarter of 2022,compared to 7.1% in the fourth quarter of 2021,mainly due toanincrease in salaries and wages as a result of the increased R&D activities for new projects.Loss from operationswas $2.6million in the fourth quarter of 2022,compared to income from operations of $0.6million in the fourth quarter of 2021.Interest expensewas $0.3 million in the fourth quarter of 2022,compared to $0.5million in the fourth quarter of 2021.Financial income was $1.4million in the fourth quarter of 2022 due to exchange fluctuations of the U.S. dollar to the Chinese RMB and the Brazilian Real,compared to financial expense of $1.5 million in the fourth quarter of 2021.Lossbefore income tax expenses and equity in earnings of affiliated companies was $2.7million in the fourth quarterof 2022,compared to a loss of $0.4million in thefourth quarter of 2021.Income tax benefit was $1.9million in the fourth quarter of 2022,compared to an income tax expense of $0.7million in the fourth quarter of 2021,mainly due to the lossbefore income tax expenses and equity in earnings of affiliated companies in the fourth quarter of 2022.Net income attributable to parent company's common shareholders was $4.3million in the fourth quarter of 2022 compared to net income attributable to parent company's common shareholders of $5.0million in the fourth quarter of 2021. Diluted income per share was $0.14in the fourth quarter of 2022,compared to diluted income per share of $0.16in the fourth quarter of 2021.The weighted average number of diluted common shares outstanding was 30,229,987 in the fourth quarter of 2022,compared to 30,853,822 in the fourth quarter of 2021.Fiscal Year 2022Net sales increased by 6.3% year-over-year to $529.6million in 2022,compared to $498.0 million in 2021. This increase was mainly due to higher sales of passenger vehicles in China,with sales to Chery Automobile up 54.5% year-over-year and total sales of electric power steering ("EPS") systems increased by 35.6% year-over-year. EPS sales represented 29.5% of total revenue in 2022 compared to 23.2% in 2021. Net sales of vehiclesteering systems to the Company's North American customers was approximately the same in 2022,but Brazil Henglong's net sales grew by 54.1% year-over-year to $39.3million.Gross profit in 2022 increased by 15.7% year-over-year to $83.4million,compared to $72.1 million in 2021.The gross margin increased to 15.7% from 14.5% in 2021 mainly due to changes in the product mix.Gain on other sales in 2022 decreased to $3.7 million,compared to $4.4 million in 2021.Selling expenses declined by 7.7% year-over-year to $16.9 millionin 2022,compared to $18.3 million in 2021,mainly due to lower transportation expenses. Selling expenses represented 3.2% of net sales in 2022,compared to 3.7% in 2021.G&A expenses increased by 7.0%year-over-year to $26.1million in 2022,compared to $24.4 million in 2021. G&A expenses represented 4.9% of net sales in 2022,compared to 4.9% of net sales in 2021.R&D expenses were $36.1 million in 2022,compared to $28.2 million in 2021. The increase was primarily due to higher investment in EPS products and other new products. R&D expenses were 6.8% of net sales in 2022,compared to 5.7% of net sales in 2021.Operating income increased by 45.5% year-over-year to $8.0million in 2022,compared to $5.5 million in 2021. The increase in operating income was mainly due to higher gross profit.Interest expense was $1.5 million in 2022,consistent with the $1.4 million in 2021.Net financial income was $10.8 million in2022,compared to net financial expense of $2.4 million in 2021,primarily due to an increase in foreign exchange gains as the U.S. dollar fluctuated against the Chinese RMB and Brazilian Real.Income before income tax expenses and equity in earnings of affiliated companies was $23.0million,compared to $8.4 million in fiscal year 2021. The change was primarily due to higher operating income and net financial income in 2022.Income tax expense was $3.1million in 2022,compared to $4.0 million in 2021.Net income attributable to parent company's common shareholders was $21.2million in 2022,compared to net income attributable to parent company's common shareholders of $11.1 million in 2021. Diluted net income per share increased by 91.7% year-over-year to $0.69in 2022 compared to $0.36 in 2021.The weighted average number of diluted common shares outstanding was 30,641,274 in 2022 compared to 30,855,431 in 2021.Balance SheetAs of December 31,2022,total cash and cash equivalents,pledged cash and short-term investments were $171.8million. Total accounts receivable including notes receivable were $224.3million. Accounts payable including notes payable were $235.1 million and short-term bank loans were $45.7 million. Total parent company stockholders' equity was $311.7million as of December 31,compared to $321.0 million as of December 31,2021. Net cashflow from operating activities was $48.0million in 2022,compared to $28.3 million in 2021. Cash paid to acquire property,plant and equipment and land use rights was $20.3million in 2022,compared to $9.3 million in 2021.Business OutlookManagement provides revenue guidance for the fiscal year 2023 of $560.0 million. This target is based on the Company's current views on operating and market conditions,which are subject to change.Conference Call

Management will conduct a conference call on March 30,2023 at 8:00 A.M. EDT/8:00 P.M. Beijing Time to discuss these results. A question and answer session will follow management's presentation. To participate,please call the following numbers 10 minutes before the call start time and ask to be connected to the "China Automotive Systems" conference call with pin 775394:

Phone Number: +1-888-506-0062 (North America)

Phone Number: +1-973-528-0011 (International)

Mainland China Toll Free: +86-400-120-3199

A replay of the call will be available on the Company's website under the investor relations section.

About China Automotive Systems,Inc.

Based in Hubei Province,the 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 ten Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers four separate series of power steering with an annual production capacity of over 6 million sets of steering gears,columns and steering hoses. Its customer base is comprised of leading auto manufacturers,such as China FAW Group,Corp.,Dongfeng Auto Group Co.,Ltd.,BYD Auto Company Limited,Beiqi Foton Motor Co.,Ltd. and Chery Automobile Co.,Ltd. in China,and Fiat Chrysler Automobiles (FCA) and Ford Motor Company in North America. For more information,please visit: http://www.caasauto.com.

Forward-Looking Statements

This press release contains statements that are "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. These forward-looking statements include statements regarding the qualitative and quantitative effects of the accounting errors,the periods involved,the nature of the Company's review and any anticipated conclusions of the Company or its management and other statements that are not historical facts. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. As a result,the Company's actual results could differ materially from those contained in these forward-looking statements due to a number of factors,including those described under the heading "Risk Factors" in the Company's Form 10-K annual report filed with the Securities and Exchange Commission on March 30,2023,and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. Any of these factors and other factors beyond our control,could have an adverse effect on the overall business environment,cause uncertainties in the regions where we conduct business,cause our business to suffer in ways that we cannot predict and materially and adversely impact our business,financial condition and results of operations. A prolonged disruption or any further unforeseen delay in our operations of the manufacturing,delivery and assembly process within any of our production facilities could continue to result in delays in the shipment of products to our customers,increased costs and reduced revenue. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release,whether as a result of new information,future events or otherwise.

For further information,please contact:

Jie Li

Chief Financial Officer

China Automotive Systems,Inc.

Email: jieli@chl.com.cn

Kevin Theiss

Investor Relations

Tel: +1-212-510-8922

Email: Kevin@awakenlab.com

-Tables Follow -

China Automotive Systems,Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands of USD,except share and per share amounts)

December 31,

2022

2021

ASSETS

Current assets:

Cash and cash equivalents

$

121,216

$

131,695

Pledged cash

37,735

27,804

Short-term investments

12,861

1,756

Accounts and notes receivable,net - unrelated parties (Allowance for credit losses of $14,359

and $11,961,respectively)

214,308

195,729

Accounts and notes receivable,net - related parties (Allowance for credit losses of $1,763

and $898,respectively)

10,016

14,607

Advance payments and others,net - unrelated parties (Allowance for credit losses of $115

and $55,907

12,696

Advance payments and others - related parties

1,439

600

Inventories

112,236

116,493

Total current assets

520,718

501,380

Non-current assets:

Property,plant and equipment,net

106,606

127,721

Land use rights,net

9,555

10,732

Intangible assets,net

1,273

1,812

Operating lease assets

477

138

Long-term time deposits

-

8,135

Other receivables,net (Allowance for credit losses of nil and $50,respectively)

46

358

Advance payment for property,plant and equipment - unrelated parties

6,331

2,284

Advance payment for property,plant and equipment - related parties

1,884

810

Long-term investments

59,810

36,966

Deferred tax assets

7,652

10,114

Other non-current assets

-

16,312

Total assets

$

714,352

$

716,762

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Short-term bank loans

$

45,671

$

47,592

Accounts and notes payable - unrelated parties

218,412

214,590

Accounts and notes payable - related parties

16,695

13,464

Customer deposits

5,654

2,400

Accrued payroll and related costs

11,628

10,984

Accrued expenses and other payables

48,311

50,332

Taxes payable

17,598

12,326

Operating lease liabilities - current portion

226

128

Total current liabilities

364,195

351,816

Long-term liabilities:

Advances payable

2,144

2,028

Operating lease liabilities - non-current portion

255

22

Long-term loans

528

—

Deferred tax liabilities

4,010

4,380

Long-term taxes payable

15,805

21,075

Total liabilities

386,937

379,321

Commitments and Contingencies

Mezzanine equity:

Redeemable non-controlling interests

582

553

Stockholders' Equity

Common stock,$0.0001 par value - Authorized - 80,000,000 shares issued – 32,338,302 and

32,302 shares at December 31,2022 and 2021,respectively

3

3

Additional paid-in capital

63,731

63,731

Retained earnings

Appropriated

11,851

11,481

Unappropriated

247,174

226,363

Accumulated other comprehensive income

(3,413)

24,717

Treasury stock – 2,152,600 and 1,486,526 shares at December 31,

respectively

(7,695)

(5,261)

Total parent company stockholders' equity

311,651

321,034

Non-controlling interests

15,182

15,854

Total stockholders' equity

326,833

336,888

Total liabilities,mezzanine equity and stockholders' equity

714,762

China Automotive Systems,Inc. and Subsidiaries

Consolidated Statements of Income or Loss

(In thousands of USD,except share and per share amounts)

YearEndedDecember31,

2022

2021

Net product sales ($44,282 and $65,131 sold to related parties for the years ended December 31,2022 and 2021)

$

529,551

$

497,993

Cost of products sold ($28,810 and $31,580 purchased from related parties for the years ended December 31,

2022 and 2021)

446,157

425,914

Gross profit

83,394

72,079

Net gain on other sales

3,696

4,368

Operating expenses:

Selling expenses

16,910

18,278

General and administrative expenses

26,120

24,423

Research and development expenses

36,109

28,228

Total operating expenses

79,139

70,929

Operating income

7,951

5,518

Other income,net

5,782

6,668

Interest expense

(1,450)

(1,437)

Financial income/(expense),net

10,753

(2,350)

Income before income tax expenses and equity in earnings of affiliated companies

23,036

8,399

Less: Income taxes

3,082

4,004

Add: Equity in earnings of affiliated companies

2,389

6,331

Net income

22,343

10,726

Net income/(loss) attributable to non-controlling interest

1,132

(352)

Accretion to redemption value of redeemable non-controlling interests

(30)

(28)

Net income attributable to parent company's common shareholders

21,181

11,050

Net income attributable to parent company's common shareholders per share -

Basic

$

0.69

$

0.36

Diluted

$

0.69

$

0.36

Weighted average number of common shares outstanding -

Basic

30,639,102

30,851,776

Diluted

30,274

30,431

China Automotive Systems,Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income or Loss

(In thousands of USD unless otherwise indicated)

YearEndedDecember31,

2022

2021

Net income

22,726

Other comprehensive income:

Foreign currency translation (loss)/gain

(29,934)

7,784

Comprehensive (loss)/income

(7,591)

18,510

Comprehensive (loss)/income attributable to non-controlling interest

(672)

128

Accretion to redemption value of redeemable non-controlling interest

(30)

(28)

Comprehensive (loss)/income attributable to parent company

$

(6,949)

$

18,354

China Automotive Systems,Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity

(In thousands of USD,except share and per share amounts)

2022

2021

Common Stock

Balance at January 1,2022 and 2021 – 32,302 and 32,302 shares,respectively

$

3

$

3

Balance at December 31,respectively

$

3

$

3

Additional Paid-in Capital

Balance at January 1

$

63,731

$

64,273

Share-based compensation

—

88

Acquisition of the non-controlling interest in Wuhu

—

(630)

Balance at December 31

$

63,731

$

63,731

Retained Earnings - Appropriated

Balance at January 1

$

11,481

$

11,303

Appropriation of retained earnings

370

178

Balance at December 31

$

11,851

$

11,481

Unappropriated

Balance at January 1

$

226,363

$

215,491

Net income attributable to parent company

21,211

11,078

Accretion of redeemable non-controlling interests

(30)

(28)

Appropriation of retained earnings

(370)

(178)

Balance at December 31

$

247,174

$

226,363

Accumulated Other Comprehensive (Loss)/Income

Balance at January 1

$

24,717

$

17,413

Net foreign currency translation adjustment attributable to parent company

(28,130)

7,304

Balance at December 31

$

(3,413)

$

24,717

Treasury Stock

Balance at January 1,2022 and 2021 – 1,526 and 1,526 shares,respectively

$

(5,261)

$

(5,261)

Repurchase of common stock in 2022 and 2021 – 666,074 and nil shares,respectively

(2,434)

—

Balance at December 31,2022 and 2021 – 2,respectively

$

(7,695)

$

(5,261)

Total parent company stockholders' equity

$

311,651

$

321,034

Non-controlling Interest

Balance at January 1

$

15,854

$

16,170

Net foreign currency translation adjustment attributable to non-controlling interest

(1,804)

480

Net income/(loss) attributable to non-controlling interest

1,132

(352)

Acquisition of the non-controlling interest in Wuhu

—

(444)

Balance at December 31

$

15,182

$

15,854

Total stockholders' equity

$

326,833

$

336,888

China Automotive Systems,Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands of USD unless otherwise indicated)

YearEndedDecember31,

2022

2021

Cash flows from operating activities:

Net income

$

22,343

$

10,726

Adjustments to reconcile net income to net cash provided by operating activities:

Share-based compensation

—

88

Depreciation and amortization

25,173

27,113

Deferred income taxes

1.243

4,020

Allowance for credit losses

4.404

2,738

Impairment loss on prepayment for investment in Hefei Senye

2,676

-

Equity in earnings of affiliates

(2,389)

(6,331)

Government subsidy reclassified from advances payable

—

(1,253)

Loss on disposal of fixed assets

58

389

(Increase)/decrease in:

Accounts and notes receivable

(36,935)

26,560

Advance payments and others

(41)

1,439

Inventories

(5,368)

(25,684)

Increase/(decrease) in:

Accounts and notes payable

27,271

(2,801)

Customer deposits

3,580

870

Accrued payroll and related costs

1,628

(2,721)

Accrued expenses and other payables

1,158

(4,081)

Taxes payable

2,925

(4,501)

Advances payable

297

1,700

Net cash provided by operating activities

48,023

28,271

Cash flows from investing activities:

Purchase of short-term investments and long-term time deposits

(80,244)

(63,478)

Proceeds from maturities of short-term investments

75,144

69,351

Decrease/(increase) in demand loans and employee housing loans included in other receivables

292

(171)

Loan to a related party

(146)

—

Repayment of loan from a related party

—

154

Cash received from property,plant and equipment sales

1,514

150

Cash paid to acquire property,plant and equipment (including $3,445 and $1,965 paid to related parties for the

years ended December 31,respectively)

(20,296)

(9,260)

Cash paid to acquire intangible assets

(188)

(642)

Cash received from long-term investment

3,986

20,621

Investment under equity method

(12,802)

(308)

Cash prepaid for investment under equity method

—

(13,454)

Net cash provided by/(used in) investing activities

(32,740)

2,963

Cash flows from financing activities:

Proceeds from bank loans

51,898

53,209

Repayment of bank loans and government loans

(49,917)

(50,803)

Repurchase of common shares

(2,434)

—

Repayments of the borrowing under sale and leaseback transaction

(1,130)

(4,450)

Acquisition of non-controlling interest

—

(1,075)

Net cash used in financing activities

(1,583)

(3,119)

Cash and cash equivalents affected by foreign currency

(14,248)

3,323

Net increase in cash and cash equivalents

(548)

31,438

Cash,cash equivalents and pledged cash at beginning of year

159,499

128,061

Cash,cash equivalents and pledged cash at end of year

$

158,951

$

159,499

China Automotive Systems,Inc. and Subsidiaries

Consolidated Statements of Cash Flows (continued)

(In thousands of USD unless otherwise indicated)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

YearEndedDecember31,

2022

2021

Cash paid for interest

$

1,492

$

1,843

Cash paid for income taxes

$

4,044

$

3,398

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:

Non-cash investing activities:

YearEndedDecember31,

2022

2021

Property,plant and equipment recorded during the year which previously were advance payments

$

2,473

$

8,543

Change in accounts payable for acquiring property,plant and equipment

$

985

$

1,510

YearEndedDecember31,

2022

2021

Supplemental disclosure of acquisition of operating lease assets

477

$

—