SORL Auto Parts Reports Second Quarter of 2008 Financial Results

                Revenue Grows 45% and Net Income Grows 15%

  Second Quarter Financial Highlights:

  -- Revenue increased 44.5% year-over-year to $42.2 million

  -- Gross profit margin increased to 27.0% compared with 21.8% a year ago

  -- Net income increased 15% to $4.7 million



ZHEJIANG, China, Aug. 13 /Xinhua-PRNewswire-FirstCall/ -- SORL Auto Parts, Inc. (NASDAQ:SORL) ("The Company"), a leading manufacturer and distributor of commercial vehicle air brake valves as well as related auto parts in China, announced today financial results for the second quarter ended June 30, 2008.

Second Quarter Results

Revenue for the second quarter of 2008 was $42.2 million, a 44.5% increase from $29.2 million for the same period in 2008.  Revenues from China's domestic OEM market, China's domestic aftermarket and international markets for the second quarter of 2008 were $17.5 million, $10.5 million, and $14.1 million, respectively.  The increase in sales was a result of the continued growth of the commercial vehicle market in China, including demand for replacement parts, as well as the continued development of export markets. For the first half of 2008 sales were $72.8 million as compared to $53.6 million in the first half of 2007, an increase of 35.9%.

Gross profit for the second quarter of 2008 was $11.4 million, a 79.4% increase as compared to $6.4 million for the same period in 2007.  Gross profit margin was 27.0% compared with 21.8% in the same quarter last year, an increase of 520 basis points.  The higher gross margin was the result of various factors including price increases, the sale of more systems versus individual components, and ongoing efforts to improve manufacturing efficiency. For the first half of 2008 gross margin was 27.5% versus 22.5% in the prior year period.

Operating expenses increased 137.5% from $2.5 million in the second quarter of 2007 to $5.9 million in the second quarter of 2008.  As a percentage of revenue, operating expenses increased from 8.5% in the second quarter of 2007 to 13.9% in the second quarter of 2008.  This increase in operating expenses as a percentage of revenue was a result of several factors the most prominent of which were an increase in transportation charges related to the rising cost of fuel and an increase in research and development expenses from $0.3 million in the second quarter of 2007 to $1.3 million in the second quarter of 2008.  For the first half of 2008 operating expenses as a percentage of sales was 13.8% versus 10.2% in the prior year period.

Operating income increased 42.4% or $1.6 million from $3.9 million in the second quarter of 2007 to $5.5 million in the second quarter of 2008.  As a percentage of revenue, operating income was 13.1% in the second quarter of 2008 as compared to 13.3% in the prior year period.  This small decrease was a result of the combination of the improved gross margin and the increase in operating expenses as a percentage of sales.  For the first half of 2008, operating income as a percentage of sales increased to 13.7% versus 12.2% in the first half of 2007.

Net income increased 15.0%, or $0.6 million, from $4.1 million in the second quarter of 2007, or $0.23 per share, to $4.7 million in the second quarter of 2008, or $0.26 per share. Net margin decreased 290 basis points from 14.1% in the second quarter of 2007 to 11.2% in the second quarter of 2008.  In addition to the above factors, net margin was negatively impacted by income taxes which changed from a $0.4 million credit in the second quarter of 2007 to a $0.3 million charge in the second quarter of 2008.  For the first half of 2008 net income was $8.3 million, or $0.45 per diluted share, an increase of 32.9% as compared to $6.2 million, or $0.34 per diluted share, in the first half of 2007.  Net margin for the first half of 2008 was 11.3% as compared to 11.6% for the first half of 2007.

"We are very pleased with our financial performance in the second quarter of 2008," said Xiaoping Zhang, SORL Auto Parts' CEO and Chairman.  "We continued to experience significant growth in all of our major markets.  We are particularly pleased to see our business in India growing rapidly along with the continued expansion of our business in the Chinese bus market.  We are also very satisfied that our efforts to improve our gross margins continue to produce positive results as our margins remain well above last year's level. Although we expect to continue to make progress in all of these areas during the second half of the year, we can also see certain challenges ahead.  First, due to the implementation of new emission standards in the China as of July 1st, 2008, we believe there may be a trend on the part of Chinese OEM's to increase orders in the first half of the year which may have a significant downward impact on OEM orders during the second half of the year.  Secondly, due to government-mandated traffic control related to the Olympics, some of our key customers will halt production during the third quarter.  It is difficult at this time to project the precise impact these factors.  While we still expect to have a strong year, it is possible we will not be able to duplicate the growth rate of the second quarter."

Management will host a conference call at 8:00 am ET on Wednesday, August 13, 2008.  Listeners may access the call by dialing #1-913-312-1294 A live webcast of the conference call will also be available at http://www.viavid.net/ .  A replay of the call will be available from August 13, 2008 to August 3, 2008.  Listeners may access the replay by dialing 1-719-457- 0820; passcode: 8647426.

About SORL Auto Parts, Inc.

As China's leading manufacturer and distributor of automotive air brake valves, SORL Auto Parts, Inc. ranks first in market share in the segment for commercial vehicles weighing more than three tons, such as trucks and buses. The Company distributes products both within China and internationally under the SORL trademark.  SORL ranks among the top 100 auto component suppliers in China, with a product range that includes 40 types of air brake valves and over 1000 different specifications.  The Company has four authorized international sales centers in Australia, United Arab Emirates, India, and the United States, with additional offices slated to open in other locations in the near future.  For more information, please visit http://www.sorl.cn/ .

Safe Harbor Statement

This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as "will", "believes", "expects" or similar expressions. These forward-looking statements may also include statements about our proposed discussions related to our business or growth strategy, which is subject to change.  Such information is based upon expectations of our management that were reasonable when made but may prove to be incorrect.  All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and upon assumptions with respect to future business decisions, which are subject to change.  We do not undertake to update the forward-looking statements contained in this press release.  For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 10-K, and our subsequent SEC filings.  Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system (EDGAR) at http://www.sec.gov/ .

                    SORL Auto Parts, Inc. and Subsidiaries
                         Consolidated Balance Sheets
                     June 30, 2008 and December 31, 2007

                                           30-Jun-08           31-Dec-07
                                          (Unaudited)          (Audited)
               Assets
  Current Assets
   Cash and Cash Equivalents        US$      4,481,177  US$      4,340,211
   Accounts Receivable, Net of
   Provision                                38,862,983          30,586,239
   Notes Receivable                         12,805,169           9,410,385
   Inventory                                13,531,271           8,220,373
   Prepayments                               3,309,421           1,336,212
   Other current assets                      2,259,417           4,275,294
        Total Current Assets                75,249,438          58,168,714
  Fixed Assets
   Property, Plant and Equipment            30,828,160          27,889,182
   Less: Accumulated Depreciation           (7,676,656)         (6,094,229)
       Property, Plant and
       Equipment, Net                       23,151,504          21,794,953

  Land Use Rights, Net                      14,627,491          13,889,705

  Other Assets
   Deferred compensation
   cost-stock options                           39,753              69,571
   Intangible Assets                           160,770              76,150
   Less: Accumulated Amortization              (31,250)            (25,116)
        Intangible Assets, Net                 129,520              51,034
   Total Other Assets                          169,273             120,605
   Total Assets                     US$    113,197,706  US$     93,973,977

   Liabilities and Shareholders' Equity
  Current Liabilities
   Accounts Payable and Notes
   Payable                          US$      8,013,208  US$      5,305,172
   Deposit Received from Customers           3,557,350           2,079,946
   Short term bank loans                     1,990,622           3,370,328
   Income tax payable                          732,316             373,769
   Accrued Expenses                          3,234,970           1,859,938
   Other Current Liabilities                   487,979             463,563
        Total Current Liabilities           18,016,445          13,452,716
  Minority Interest                          9,493,164           8,024,152

  Shareholders' Equity
   Common Stock - $0.002 Par
    Value; 50,000,000 authorized,
    18,279,254 issued and
    outstanding as of June 30,
    2008 and December 31, 2007
    respectively                                36,558              36,558
   Additional Paid In Capital               37,498,452          37,498,452
   Reserves                                  2,661,841           1,882,979
   Accumulated other comprehensive
    income                                  10,355,764           5,432,189
   Retained Earnings                        35,135,482          27,646,931
                                            85,688,097          72,497,109
   Total Liabilities and
   Shareholders' Equity             US$    113,197,706  US$     93,973,977



                    SORL Auto Parts, Inc. and Subsidiaries
    Consolidated Statements of Income and Comprehensive Income (unaudited)
       For The Three Months and Six Months Ended June 30, 2008 and 2007

                           Three Months Ended        Six Months Ended
                               June 30,                  June 30,
                            2008         2007         2008        2007

  Sales               US$ 42,186,119   29,189,572   72,844,561  53,606,561

  Cost of Sales           30,776,773   22,829,287   52,793,354  41,555,339

  Gross Profit            11,409,346    6,360,285   20,051,207  12,051,222

  Expenses:
   Selling and
    Distribution
    Expenses               2,771,803    1,331,643    4,611,078   2,515,290
   General and
    Administrative
    Expenses               2,718,217    1,027,436    4,694,418   2,720,623
   Financial Expenses        383,320      114,268      752,996     257,436

       Total Expenses      5,873,340    2,473,347   10,058,492   5,493,349

  Operating Income         5,536,006    3,886,938    9,992,715   6,557,873


  Other Income               222,762      351,932      333,840     384,272
  Non-Operating
   Expenses                 (175,785)     (80,550)    (254,963)    (84,639)

  Income (Loss) Before
  Provision for Income
   Taxes                   5,582,983    4,158,320   10,071,592   6,857,506

  Provision for Income
   Taxes                     318,757     (422,721)     882,231     (60,256)

  Net Income Before
   Minority Interest
    & Other
    Comprehensive
    Income            US$  5,264,226    4,581,041    9,189,361   6,917,762

  Minority Interest          527,929      461,930      921,948     697,119

  Net Income
   Attributable to
   Shareholders            4,736,297    4,119,111    8,267,413   6,220,643

  Foreign Currency
   Translation
   Adjustment              2,110,749    1,075,648    5,470,639   1,697,589

  Minority Interest's
   Share                     211,075      107,565      547,064     169,759

  Comprehensive Income
   (Loss)                  6,635,971    5,087,194   13,190,988   7,748,473


  Weighted average
   common share -
   Basic                  18,279,254   18,275,126   18,279,254  18,275,126

  Weighted average
   common share -
   Diluted                18,287,764   18,322,260   18,288,958  18,328,526

  EPS - Basic                   0.26         0.23         0.45        0.34

  EPS - Diluted                 0.26         0.22         0.45        0.34



  For more information, please contact:

   Richard Cai
   Director of Investor Relations
   SORL Auto Parts, Inc.
   Tel:   [phone]
   Email: 

   Dan Joseph
   ICR, Inc.
   Tel:   [phone]
   Email: 

   Bill Zima
   ICR, Inc.
   Tel:   [phone]
   Email: 

DATASOURCE: SORL Auto Parts, Inc.



CONTACT: Richard Cai, Director of Investor Relations of SORL Auto Parts,

Inc., [phone], or ; Or Dan Joseph of ICR, Inc.,

[phone], or ; Or Bill Zima of ICR, Inc., +1-203-

682-8200, or  



Web site: http://www.sorl.cn/

http://www.viavid.net/

http://www.sec.gov/ 

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