China Automotive Systems, Inc.

Greetings and welcome to the China Automotive Systems fourth quarter 2020 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Kevin Thies, Investor Relations. Please go ahead, sir.

Thank you, everyone, for joining us today. Welcome to China Automotive Systems' 2020 Fourth Quarter and Annual Conference Call. Joining us today are Mr. Kui-Zhu Wu, Chief Executive Officer, and Mr. Jay Lee, Chief Financial Officer of China Automotive Systems. They will be available to answer questions later in the conference call with the assistance of translation. Before we begin, I'll remind all listeners that throughout this call, we may make statements that may contain forward-looking statements. Forward-looking statements represent the company's estimates and assumptions only as of the date of this call. 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 for the year ended December 31, 2020, as filed with the Securities and Exchange Commission today. And another document filed by the company from time to time with the Securities and Exchange Commission. If the outbreak of COVID-19 is not effectively and timely controlled, our business operations and financial condition may be materially and adversely affected as a result of the deteriorating market outlook for automobile sales. The slowdown in regional and national economic growth weakened liquidity and financial condition of our customers or other factors that we cannot foresee. Any of these factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainty in the regions where we conduct business, cause our business to suffer in ways that we cannot predict, and materially impact our business financial condition and results of operations. A prolonged disruption or any further unseen delay in our operations of the manufacturing, delivery, and assembly processes within any of our production facilities could continue to result in delays in the shipment of products to our customers, increase costs, and reduce revenue. The company expressly disclaims any duty to provide updates to any forward-looking statements made in this call, whether a result of new information, future events, or otherwise. On this call, I will provide a brief overview and summary of the fourth quarter and annual financial results for the period ended December 31, 2020. Management will then conduct a Q&A session. The following 2020 fourth quarter financial results are unaudited and the annual results are audited and both results are reported using U.S. GAAP accounting. For the purposes of our call today, I will review the financial results in U.S. dollars. We'll begin with review of the recent dynamics of the Chinese economy, automobile industry, and China automotive's market position. The Chinese economy has fully recovered from the impact of the COVID-19 pandemic, with GDP attaining a 6.5% growth rate in the fourth quarter of 2020 and a 2.3% growth rate for the full year of 2020. Statistics from the China Association of Automobile Manufacturers, CAAM, show that in the 2020 fourth quarter, for the month of October 2020, overall automobile sales rose by 12.5% year-over-year, with passenger vehicle sales up by 9.3%, commercial vehicle sales 30.1% higher than the same month a year ago. In November 2020, overall automobile sales were up 12.6% year-over-year, with passenger vehicle sales 11.6% higher, and commercial vehicle sales 18% above last year's November numbers. In December 2020, overall automobile sales rose 6.4% year over year, with passenger vehicle sales up 7.2% and commercial vehicle sales 2.4% higher than last year. December was the ninth straight month that overall automobile vehicle sales rose.

For the full year of 2020,