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Roth China Comes to Vegas Conference November 2008 SORL AUTO PARTS, INC. SORL AUTO PARTS, INC. NASDAQ: SORL NASDAQ: SORL

Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

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Page 1: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

Roth China Comes to Vegas Conference

November 2008

SORL AUTO PARTS, INC.SORL AUTO PARTS, INC.NASDAQ: SORLNASDAQ: SORL

Page 2: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

SAFE HARBOR STATEMENTSAFE HARBOR STATEMENT

This presentation contains "forward-looking statements" within the meaning of the

“safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such

statements involve known and unknown risks, uncertainties and other factors that could

cause the actual results of the Company to differ materially from the results expressed

or implied by such statements, including changes from anticipated levels of sales,

future national or regional economic and competitive conditions, changes in

relationships with customers, access to capital, difficulties in developing and marketing

new products, marketing existing products, customer acceptance of existing and new

products, and other factors. Accordingly, although the Company believes that the

expectations reflected in such forward-looking statements are reasonable, there can be

no assurance that such expectations will prove to be correct. The Company has no

obligation to update the forward-looking information contained in this presentation.

Page 3: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

BUSINESS DESCRIPTIONBUSINESS DESCRIPTION

Market Position Established in 1987; over 20 years of history The largest air brake system supplier for commercial vehicles in China Rapid growth

Facilities

Total floor area of over 700,000 square feet Located in Ruian (China’s biggest region for automotive parts production) Enjoy the benefits of logistics, outsourcing and professional labor force World Class Manufacture Facilities

Main Business Air brake system used in commercial vehicles larger than 3 tons Penetrating Bus and Agricultural Vehicle Market Since 2007

Sales Network

OEM: Sales to top 50 domestic OEM customers Aftermarket: 28 authorized distributors and over 800 sub-distributors Exports: 3 distributors in UAE, Australia, USA;

exports to over 81 countries and regions worldwide

Page 4: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

CAPITAL MARKETS SUMMARYCAPITAL MARKETS SUMMARY

Ticker Symbol NASDAQGM: SORL

Recent Price (as of 10/31/08) $2.72

Shares Outstanding 18.3 Million

Market Cap $49.7 Million

Legal Counsel Morris, Manning & Martin, LLP

Auditor Rotenberg & Co., LLP

Revenue (ttm, as of 09/30/08) $138.3 million

Net Income (ttm, as of 09/30/08) $13.0 million

Book Value (mrq) $88.6 million

Page 5: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

INVESTMENT HIGHLIGHTSINVESTMENT HIGHLIGHTS

High Growth Market

•Commercial vehicle market has grown at a CAGR of 14% since 2002 •Chinese is the second vehicle market at present, will be No 1 in 2010•Market Driver (GDP of China; Fundamental Structure; Logistic; Development of highway , government policy etc.)•Our niche market

Leading Market Position in China

51 OEMs customers in China Nationwide network of 28 distributors and 800 sub-distributors Unmatched in China

Proven Record of Organic Growth

Sales: $47 million in 2004 to $116 million in 2007; 35% CAGR Net income: $4.8 million in 2004 to $10.7 million in 2007; 31% CAGR TTM revenue (as of September 30, 2008): 138 million TTM net income (as of September 30, 2008): 13.0 million

World-Class Manufacturing Ability

ISO/TS16949 Quality Management System OHSAS18001 System ISO14001 Environmental Management System; Lean manufacturing implemented

Page 6: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

INVESTMENT HIGHLIGHTS INVESTMENT HIGHLIGHTS

Moving from components to systems (enhances margins) Electronics initiative is expected to further distance SORL from competitors

Competitive Value (Domestic)

Low-cost supply network Local cost structure Cheap labor force China-based R&D efforts, closer to the end market Sales network

Experienced Management Team

Competitive Value (Abroad)

Management Team

Product Development and R&D Advantage

Brand recognition Scale and scope efficiency Sophisticated management Competitive quality Strong R&D capabilities

Page 7: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

PRODUCTSPRODUCTS

Air BrakesAir Brakes Use compressed air to provide the force used for service and park brakes Found in all large commercial vehicles

40 categories sold by SORL40 categories sold by SORL Over 1000 specifications Key components include Spring Brake Chamber,

Clutch Servo, Air Dryer, Relay Valves, and Hand Brake Valves

Focus on air brake systems vs componentsFocus on air brake systems vs components Eg, air preparation units vs. air dryers Higher margins Required technical ability serves as barrier to entry

Page 8: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

ADVANCED R&D CAPABILITIESADVANCED R&D CAPABILITIES

SORL currently owns 12 patentsSORL currently owns 12 patents

6 pending patent application in China

3 additional in US

68 technical staff, including 43 engineers or senior engineers 68 technical staff, including 43 engineers or senior engineers

Partnerships for new automobile technology research:Partnerships for new automobile technology research:

Leading Universities

Research groups of OEM customers

Helping to further product development and management

Budget expanded to develop new products that will generate future Budget expanded to develop new products that will generate future global growth and increase profit margins: global growth and increase profit margins:

SORL is closing the gap with foreign suppliers by constantly improving products

SORL launched electronic part development program two years ago

Page 9: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

MARKETS AND CUSTOMERSMARKETS AND CUSTOMERS

  (million USD)

2005 2006 2007 CAGR

China OEM 20.6 27.1 41.2 41.4%

China AfterMarket

20.2 23.9 31.1 24.1%

Export 23.4 33.9 43.4 36.2%

Total 64.2 84.9 115.8 34.3%

Sales channels include Chinese OEMs, the aftermarket in China, Sales channels include Chinese OEMs, the aftermarket in China, and exports to the aftermarket in 81 countries around the world. and exports to the aftermarket in 81 countries around the world.

Page 10: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

MARKETS: CHINESE OEMSMARKETS: CHINESE OEMS51 OEM customers in China, including all major truck 51 OEM customers in China, including all major truck

manufacturersmanufacturers

SORL is the leading supplier to the dominant truck manufacturers SORL is the leading supplier to the dominant truck manufacturers in Chinain China

The big 5 continue to dominate the market, accounting for 91% of Chinese total heavy duty truck output in Q1 2008.

Major customers are all increasing their business with SORLMajor customers are all increasing their business with SORL

Auto Makers FAW DongfengChina Nat’l Heavy Duty

Truck GroupShaanqi Beiqi Foton

Market Share in China

24.8% 21.6% 20.1% 12.6% 12.2%

% Valves Supplied by SORL

40% 19% 6% 22% 31%

(million USD) Y2005 Y2006 Y2007 CAGR

FAW Jiefang 3.49 5.62 8.77 35.9%

FAW Qingdao 2.88 4.73 5.48 23.9%

Dongfeng Axle 2.06 3.69 5.02 35.2%

Beiqi Foton Zhucheng 0.41 2.23 3.42 103.1%

Boiqi Foton Aumen 1.58 1.71 3.09 25.0%

Anhui Hualing 0.90 0.96 2.54 41.2%

FAW Shandong 0.65 1.20 1.80 40.4%

Page 11: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

MARKETS: CHINESE MARKETS: CHINESE AFTERMARKETAFTERMARKET

Nationwide:28 distributors and over 800 sub-distributors, covering 7 regions nationwide

Aftermarket/OEM Synergy:OEM business feeds aftermarket business as owners generally prefer to replace original parts with the same brand

Competition:No other company in China, including foreign competitors, has an aftermarket distribution network comparable to SORL’s

Barrier to Entry:Serves as a barrier to entry and an asset which can be leveraged to support additional parts that may be developed or acquired

Leading Distribution Network Throughout ChinaLeading Distribution Network Throughout China

Page 12: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

MARKETS: EXPORT MARKETS: EXPORT AFTERMARKETAFTERMARKET

  (million USD)

2005 2006 2007 CAGR

U.S 3.3 5.7 8.8 39%

Europe 3.6 7.4 8.0 30%

Asia 9.8 10.5 14.7 15%

India 0.10 0.23 0.57 76%

Cost advantage vs. foreign brands presents significant export opportunity Cost advantage vs. foreign brands presents significant export opportunity

Exports to 81 countries in 2007; will continue to add dealerships overseasExports to 81 countries in 2007; will continue to add dealerships overseas

Strategic goal of acquiring distributors in the US:Strategic goal of acquiring distributors in the US: Accelerate growth Replicate distribution advantage already established in China

Page 13: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

MANUFACTURINGMANUFACTURING

Certifications:ISO/TS16949 Quality Management System, OHSAS18001 System, and ISO14001 Environmental Management System

Lean manufacturing:Reorganized production lines from traditional straight-line layout to U-shape track, shortening total cycle time and enabling quick adjustments to production. Other lean practices continue to be implemented.

Increased Efficiency:Output per person has increased 30% last years

Quality Audit:Never failed a quality audit by a supplier, which is crucial in developing OEM business

Page 14: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

COMPETITION: DOMESTICCOMPETITION: DOMESTIC

Auto parts is a highly fragmented market with many smaller players

Chinese OEM requirements relative to quality, delivery, inventory, and technical support are not easy to meet

SORL’s aftermarket distribution network is difficult to duplicate

In terms of manufacturing, quality, distribution, product development, and technical support, it will be difficult for others to catch up with SORL

Nationwide Sales

Network

Close Relationship

with Big OEMs

Performance-Cost Ratio

Warranty and

ReliabilityTimely

Delivery

Efficient Customer Services

Other Small Suppliers No No Low Low Poor Poor

SORL Auto Parts Yes Yes High High Good Good

SORL has a leadership position that will be difficult to challengeSORL has a leadership position that will be difficult to challenge

Page 15: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

COMPETITION: FOREIGNCOMPETITION: FOREIGN

Foreign companies have limited themselves to the high end of Foreign companies have limited themselves to the high end of the market in Chinathe market in China

Do not have an aftermarket distribution network like SORL

Have not been able to develop the technical support levels that SORL has

As a result, foreign companies are losing market share in China As a result, foreign companies are losing market share in China as SORL’s quality improvesas SORL’s quality improves

Foreign share of air brakes estimated to be 10%, down from 25% 2 years ago

Overseas, SORL’s cost advantage and constantly improving Overseas, SORL’s cost advantage and constantly improving quality will drive future export growthquality will drive future export growth

Page 16: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

STRATEGIC VISIONSTRATEGIC VISION

Global LeaderWe aim to be a leading global supplier of air brake valves and related products

Capacity ExpansionExpand production capacity to meet the growing demand in China market and support the future international expansion plan

New ProductsDevelop scalable product technologies and capacities, focusing on electronics and controls; establish position as a integrated system provider in China

New SectorsAccelerate growth into public transportation segment

Overseas AcquisitionEnhance export potential by acquiring US distributors or parts makers

Page 17: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

MANAGEMENT TEAMMANAGEMENT TEAM

Xiaoping Zhang, Chairman and CEOXiaoping Zhang, Chairman and CEO

• Co-founder of Ruili Group

• President of the Ruian Auto Parts Association in Wenzhou, Zhejiang Province

• Vice President of China Federation of Industry and Commerce Auto & Motorbike Parts Chamber of Commerce

Xiaofeng Zhang, COOXiaofeng Zhang, COO

• Co-founder of Ruili Group – General Manager

• Spearheads SORL’s sales and marketing effort

Zongyun Zhou, CFOZongyun Zhou, CFO

• Certified Public Accountant in China

• Chief Financial Officer of Shanghai Huhao Auto Parts Manufacturing Company Limited, a joint venture between the Ruili Group and Shanghai Auto Group, 2002 - 2004

Page 18: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

FINANCIAL HIGHLIGHTSFINANCIAL HIGHLIGHTS

Steady Revenue Growth($, millions)

Improved Profitability

Page 19: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

SUMMARY INCOME SUMMARY INCOME STATEMENTSTATEMENT

($MM)

Revenue

Gross Profit

Operating Profit

Net Income

Revenue Growth

Net Income Growth

Gross Margin

Operating Margin

Net Margin

12/31/2005

64.2

14.3

5.5

4.9

37.1%

3.0%

22.3%

8.6%

7.7%

12/31/2006

84.9

19.3

9.9

7.7

32.3%

55.5%

22.7%

11.6%

9.1%

12/31/2007

115.8

27.0

12.0

10.7

36.4%

39.6%

23.3%

10.4%

9.3%

Q307

29.7

6.6

2.7

2.1

39.5%

19.6

22.3%

9.0%

7.1%

Q308

33.0

8.4

2.9

2.3

11%

10.9%

25.5%

8.8%

7.1%

Page 20: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

SUMMARY BALANCE SHEETSUMMARY BALANCE SHEET

(In '000 $USD )Sep. 30, 2008 Dec. 31, 2007 Dec. 31, 2006

Cash and cash equivalents 5,951 4,340 11,138

Accounts receivable 36,211 30,586 26,751

Inventory 20,832 8,220 4,529

Total Current Assets 76,149 58,169 54,370

Property, plant and equipment, net 24,220 21,795 16,312

Total Assets 115,153 93,974 70,880

Accounts payable 5,094 5,305 4,621

Total Current Liabilities 16,789 13,453 7,175

Total Liabilities 16,789 13,453 7,175

Total Shareholders' Equity 88,550 72,497 57,369

Total Liabilities and Shareholders’ Equity 115,153 93,974 70,880

Page 21: Roth China Comes to Vegas Conference November 2008 SORL A UTO P ARTS, I NC. NASDAQ: SORL

SORL AUTO PARTS, INC.SORL AUTO PARTS, INC.

NASDAQ: SORLNASDAQ: SORL

Ben Chen Ben Chen

Senior Manager, Investor Relation

Phone: +86 (577) 6581 7720

Fax: +86 (577) 6581 7733

Email: [email protected]

Web: www.sorl.cn