Speech at the OICA 2010 Round Roundtable Dong Yang Executive Vice-chairman & Secretary General, CAAM New Deli, Oct. 22, 2010

From 1998 – 2008, China’s GDP grew 7 times, where as the total length of operational highways increased by 6 times, from 9,000 Km to over 60,000 Km. The fast economic growth stimulated the demand for transportation, whereas the development of highways and automotive manufacturing have also propelled continuous growth of the economy. 2

China’s GDP Growth tb RMB 3

China’s Highway Growth 10t KM 4

--China produced 13.79 million automobiles, --an increase of 142% over 2005, --accounting for 22.6% of global output, -- ranking world’s No. 1. 5

Annual Output Development 10t units 6

China’s Output vs. World’s 7

3. Despite the fast-growing output, China’s auto ownership per capita is relatively low in comparison with other countries. From the market perspective, there is still room for huge growth, especially in China’s vast countryside. 8

year China Other countries 9 In use（unit） people （/1000） GDP/person usd country or district 2001 17592000 1276270 14 901 Korea 1980 1633 2002 20145900 1284530 16 1087 Japan 15 1960 458 2003 23829254 1292270 18 1090 Tai Wan 1975 - 2004 26937137 1299880 21 1490 20 1983 1923 2005 31596600 1307560 24 1702 Brazil 25 1965 374 23 1984 2054 2006 36973500 1314480 28 2017 27 1985 2747 2007 43583550 1321290 35 2460 39 1987 3110 2008 50996094 1328020 38 3314 9

4. Along with the fast growth of the auto industry, the pressure on energy, environment and traffic has also increased. It has become an imperative to develop new energy vehicles, seek alternative fuels or reduce fuel consumption. Climatic challenges such as greenhouse effect as well as environmental protection have also attracted attention from all countries. It is now a consensus among governments that the road of low carbon economy and sustainability must be pursued. 10

The Chinese government is beefing up policies that favor the development of new energy vehicles and small, energy-saving vehicles. Policies merely aimed at increasing auto consumption are being phased out. 11

On May 31, 2010, the Chinese government released the policy to award a one-off subsidy to private purchases of PHEVs and BEVs. The subsidy is based on the energy density of the battery pack. Each qualified model will be awarded with RMB3,000 per kwh. The max subsidy for PHEV is RMB50,000, for BEV is RMB60,000 12

On June 30, 2010, the Chinese government released the policy to provide a one-off subsidy of RMB3,000 to each qualified energy-saving model, which is materialized through payment to customers by the OEMs upon completion of sales. 13

4. Along with the fast growth of the auto industry, the pressure on energy, environment and traffic has also increased. It has become an imperative to develop new energy vehicles, seek alternative fuels or reduce fuel consumption. Climatic challenges such as greenhouse effect as well as environmental protection have also attracted attention from all countries. It is now a consensus among governments that the road of low carbon economy and sustainability must be pursued. 14

5. According to CAAM’s forecast, China’s output of automobiles in 2010 will reach 17 million units, an increase of 23% over 2009, whereas 2011’s output will be 10 – 15% higher than 2010. 15

Thank you ! 16