/ CORRECTION - China Auto Logistics Second Quarter Revenues Grew 18.3% on Sustained Growth in Imported Luxury Vehicle Sales

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TIANJIN, CHINA--(Marketwire -08/14/12)- In the news release, "China Auto Logistics Second Quarter Revenues Grew 18.3% on Sustained Growth in Imported Luxury Vehicle Sales," issued earlier today by China Auto Logistics Inc. (CALI), we are advised by the company that the fourth sentence of the fifth paragraph should read "Gross margins on these sales were 0.95% in the 2012 second quarter, compared with 1.01% a year earlier" rather than "Gross margins on these sales were 1.96% in the 2012 second quarter, compared with 2.94% a year earlier" as originally issued. Complete corrected text follows.

China Auto Logistics Second Quarter Revenues Grew 18.3% on Sustained Growth in Imported Luxury Vehicle Sales

Planned Reduction in Web-Based Advertising Sales Lowers Profits, Despite Sharp Advance in Financing Services

Investor Conference Call Scheduled on Thursday, August 16th at 8:00am ET

TIANJIN, CHINA -- August 14, 2012 -- China Auto Logistics Inc. (the "Company") (CALI), one of China's leading developers of websites for buyers and sellers of imported and domestic automobiles, a top seller in China of imported luxury cars, and a leading provider of auto-related services, reported today that led by continuing growth in luxury imported auto sales in China, revenues in its second quarter ended June 30, 2012 grew 18.32% to $150,047,968 from $126,810,558 in the same period last year.

At the same time, the Company continued to shift from rapidly growing web-based advertising sales to utilizing its sites as information platforms for promoting automobile sales and its higher margin auto related services. Consequently, despite contributions from other services, and especially strong gains in financing services, net income attributable to shareholders declined by 27.85% to $1,649,461 or $0.07 per share in the 2012 second quarter compared with $2,286,200 or $0.12 per share in the same period last year.

For the six months ended June 30, 2012, revenues reached $257,493,554, up 23.57% from $208,384,546 in the first half of 2011. Net income attributable to shareholders in the first half of 2012 decreased 25.95% to $3,230,938 from $4,363,334 in the same period of 2011, or $0.15 compared with $0.23 on a per share basis respectively. The weighted average number of shares outstanding was 22,163,427 in the 2012 second quarter and 19,163,427 in the same period last year.

Continuing Growth

Mr. Tong Shiping, CEO and Chairman of the Company stated, "We recognize we are sacrificing some profits at present with our decision to exit the highly competitive website advertising arena, particularly given the low margins in our auto sales. However, we believe we have developed a strong Internet presence with our sites that will bolster continuing growth of our auto sales where there is room for margin growth, and more importantly, present and future high margin auto-related services such as financing, which in the latter case achieved more than a tripling of operating income in this year's second quarter compared with last year. Further, we see continuing rapid growth ahead in luxury auto sales and related services, and will continue to seek to expand our leadership in this niche."

Second Quarter Auto Sales Up 19.62%

Auto sales in the second quarter of 2012 grew 19.62% to $147,243,467 compared with results in the same period last year and were 98.13% of total revenues in the 2012 period. This growth was based on a 48% year over increase in volume, from 1,129 vehicles in the comparable period last year to 1,675 vehicles in 2012. At the same time, the average unit selling price in the 2012 second quarter decreased 19.37% to $87,907 reflecting higher demand for lower end models of top selling luxury brands. Gross margins on these sales were 0.95% in the 2012 second quarter, compared with 1.01% a year earlier. Nevertheless, auto sales made a $1,217,353 contribution to total operating income in the quarter of $2,467,494. Automobile sales during the first six months of 2012 were up 24.92% year over year to $251,541,304, while gross margins in the 2012 period increased slightly to 1.26%.

Growth forecasts for the high-end automobile market vary, but in most cases exceed those for China's mainstream auto market. HIS Automotive forecasted in April this year that high end auto sales growth of 139.5% from 2010 to 2015, will soon make China the top market for most major luxury brands. This is the market on which the Company remains focused.

Finance Services Led Auto-related Services Growth

During the second quarter of 2012, year over year revenues from the Company's financing services grew 84.60% to $2,037,550 and were the second biggest contributor after auto sales to revenues and operating income in the period. Additionally, operating income from financing services in the 2012 second quarter of $911,364, was more than triple the $294,325 in operating income generated by financing services in the second quarter last year.

In the first six months of 2012, the income from operations for automobile sales was $2,652,883, followed by $1,614,985 from financing services, while total operating income in the first six months of 2012 was $4,911,126.

The Company had aggregate lines of credit with several of China's leading banks totaling approximately $128 million and approximately $60 million drawn on those lines as of June 30, 2012. During the quarter, the Company continued to add new financing service types and increased the price for its services. In turn, this increased gross margins in financing services to 51.14% from 46.53% in the same period last year. The Company believes it has established good credit with China's major commercial banks and will be able to continue to access additional credit lines as may be needed if growth in auto transactions continue.

The contribution from web-based advertising services to operating income in the quarter was $192,380, down substantially from just over $2 million in the prior year period, as the Company continued to shift its focus from generating advertising revenue to utilizing its websites to provide information to attract new customers to its auto sales and services. The sites provide information in 50 cities throughout China and are targeted to expand to 60 cities. So far the Company believes the results of this shift have been positive despite the bottom line impact, and will create opportunities for higher potential growth of its other service products.

During the second quarter of 2012 contributions to operating income of $342,734 and 231,837 respectively also came from automobile import value added services and auto mall management services.

Looking Ahead

Commenting further, Mr. Tong stated, "At the end of the second quarter, the sum of our revenues from higher margin auto related services, including the sharply lower amount from web-based advertising, was approximately $2.6 million, from which we had income from operations of approximately $2.47 million as compared with approximately $3.13 million a year earlier. Going forward, we believe we can exceed prior operating income results and improve profits, with continued growth in our current and new automobile-related services, and as expanding awareness of our Company's leadership in luxury auto sales continues to match growth in the segment."

Conference Call Invitation

The Company will discuss 2012 second quarter and first half results during a live conference call and webcast on Thursday, August 16, at 8:00am ET.

To participate in the call, interested participants should call 1-877-941-1427 when calling within the United States or 1-480-629-9664 when calling internationally. Please ask for the China Auto Logistics 2012 Second Quarter Earnings Conference Call, Conference ID: 4559503. There will be a playback available until 08/23/12. To listen to the playback, please call 1-877-870-5176 when calling within the United States or 1-858-384-5517 when calling internationally. Use the Replay Pin Number: 4559503.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://public.viavid.com/index.php?id=101460 or at ViaVid's website at http://viavid.com.

About China Auto Logistics Inc.

China Auto Logistics Inc. is one of China's top sellers of imported luxury vehicles, and also manages China's largest imported auto mall in Tianjin. Additionally, it operates www.cali.com.cn, one of the leading automobile portals in China, as well as three major websites serving China's auto dealers and their customers. The Company also provides a growing variety of "one stop" automobile related services such as short term dealer financing. Additional information about the Company is available at www.chinaautologisticsinc.com.

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.

 


CHINA AUTO LOGISTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2012 2011 2012 2011
------------ ------------ ------------ ------------

Net revenue $150,047,968 $126,810,558 $257,493,554 $208,384,546
Cost of revenue 146,999,242 122,653,415 250,914,243 200,253,179
------------ ------------ ------------ ------------
Gross profit 3,048,726 4,157,143 6,579,311 8,131,367
------------ ------------ ------------ ------------

Operating expenses:
Selling and
marketing 182,713 364,496 428,390 738,643
General and
administrative 398,519 667,018 1,239,795 1,349,834
------------ ------------ ------------ ------------
Total operating
expenses 581,232 1,031,514 1,668,185 2,088,477
------------ ------------ ------------ ------------

Income from
operations 2,467,494 3,125,629 4,911,126 6,042,890

Other income
(expenses)
Interest income 15,308 15,164 28,672 27,682
Interest expenses (140,620) - (226,644) -
Loss on disposal
of property and
equipment (26,478) - (72,074) -
Miscellaneous (114) (1,490) (114) (10,577)
------------ ------------ ------------ ------------
Total other
income
(expenses) (151,904) 13,674 (270,160) 17,105
------------ ------------ ------------ ------------

Income before income
taxes 2,315,590 3,139,303 4,640,966 6,059,995

Income taxes 663,084 825,932 1,399,673 1,642,120
------------ ------------ ------------ ------------

Net income 1,652,506 2,313,371 3,241,293 4,417,875

Less: Net income
attributable to
noncontrolling
interests 3,045 27,171 10,355 54,541
------------ ------------ ------------ ------------

Net income
attributable to
shareholders of
China Auto
Logistics Inc.     $ 1,649,461 $ 2,286,200 $ 3,230,938 $ 4,363,334
============ ============ ============ ============

Earnings per share
attributable to
shareholders of
China Auto
Logistics Inc.-
basic and diluted $ 0.07 $ 0.12 $ 0.15 $ 0.23
============ ============ ============ ============

Weighted average
number of common
shareoutstanding -
basic and diluted 22,163,427 19,163,427 22,163,427 19,163,427
============ ============ ============ ============



CHINA AUTO LOGISTICS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

June 30,
2012 December 31,
(Unaudited) 2011
------------- -------------
ASSETS
Current assets
Cash and cash equivalents $ 2,498,344 $ 8,184,793
Restricted cash 19,907,523 18,805,876
Accounts receivable - trade, net of allowance
for doubtful accounts of $0 and $2,796 as of
June 30, 2012 and December 31, 2011,
respectively 41,713 107,936
Receivables related to financing services 70,343,939 89,252,244
Notes receivable 9,510,374 4,761,225
Inventories 30,620,743 28,702,113
Advances to suppliers 51,607,300 44,746,804
Prepaid expenses 124,326 141,665
Value added tax refundable 1,283,596 625,724
------------- -------------
Total current assets 185,937,858 195,328,380

Property and equipment, net 487,772 642,672
Goodwill 3,731,835 3,736,573
Intangible assets, net 1,298,758 1,419,830
Other assets 35,371 37,637
------------- -------------
Total Assets $ 191,491,594 $ 201,165,092
============= =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Lines of credit related to financing services $ 60,158,775 $ 87,710,957
Short term borrowings 9,662,478 4,285,102
Accounts payable 649,627 1,566
Notes payable to suppliers 19,020,748 -
Accrued expenses 273,316 446,264
Customer deposits 36,454,497 46,865,945
Deferred revenue 194,822 319,974
Due to shareholders 3,292,368 3,296,548
Due to director 521,090 22,316
Income tax payable 1,028,367 1,161,664
------------- -------------
Total current liabilities 131,256,088 144,110,336
Deferred tax liability 328,842 359,342
------------- -------------
Total liabilities 131,584,930 144,469,678
------------- -------------
Equity
China Auto Logistics Inc. shareholders' equity
Preferred stock, $0.001 par value, 5,000,000
shares authorized, none issued and
Outstanding -
Common stock, $0.001 par value, 95,000,000
shares authorized, 22,163,427 shares issued
and outstanding as of June 30, 2012 and
December 31, 2011 22,163 22,163
Additional paid-in capital 21,975,605 21,975,605
Accumulated other comprehensive income 5,669,231 5,699,444
Retained earnings 31,670,260 28,439,322
------------- -------------
Total China Auto Logistics Inc.
shareholders' equity 59,337,259 56,136,534
Noncontrolling interests 569,405 558,880
------------- -------------
Total equity 59,906,664 56,695,414
------------- -------------

Total liabilities and shareholders' equity $ 191,491,594 $ 201,165,092
============= =============

Contact:

Sun Jiazhen
sjz_cali@126.com
Ken Donenfeld
DGI Investor Relations Inc.
kdonenfeld@dgiir.com
Tel: 212-425-5700
Fax: 646-381-9727

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