Wonder Auto Technology Reports Record Quarterly 2008 Sales and Net Income

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JINZHOU CITY, China, November 3, 2008: Wonder Auto Technology, Inc. ("Wonder Auto" or the "Company"), a leading manufacturer of automotive electrical, suspension parts and engine accessories in China, today announced record quarterly financial results for the third quarter ended September 30, 2008.

Q3 Highlights:

Sales revenue increased 43.9% year-over-year to a record US $39.3 million
Gross profit rose 42.4% year-over-year to a record US$10.1 million
Net income increased 72.9% year-over-year to US$6.4 million
Export sales represented 15.8% of the higher total revenues
EPS rose 60% over same period last year to US$0.24, on 3 million more weighted
average shares outstanding

Third quarter sales revenue rose to a record of US$39.3 million, a 43.9% increase from the 2007 third quarter revenue of US$27.3 million. The increase was mainly attributable to increased demand for mid to small displacement alternator and starter products, which grows faster than the overall automobile industry, increased sales to the new and existing clients and growth in export sales. Sales to existing customers increased $7.4 million and sales to new customers contributed $4.6 million due to the Company's competitive products at attractive prices. Export sales increased by 138.0% to US 6.2 million as compared to that in the third quarter of 2007.

In the first nine months of 2008, China's auto market continued its solid growth. Due to the general affordability, fuel prices, environmental concerns and government tax incentives, the mid- to small engine passenger vehicles still dominate China's passenger vehicle market with an increased market share. Wonder Auto benefited from this large and growing market with increased sales of high performance alternators and starters, as well as rods and shafts products.

2008 third quarter gross profit increased 42.4% to a record of US$10.1 million from a gross profit of US$7.1 million in the same quarter of 2007. Gross margin was 25.8% in the 2008 third quarter compared with 26.0% for the same period last year. The decreased gross margin was due to the change of the Company's product portfolio to manufacture more smaller displacement starter and alternator products which generally have relatively lower gross margin than the larger displacement products.

Operating expenses for the 2008 third quarter were US$3.3 million as compared to US$1.9 million in the same period of 2007, reflecting a 79.6% increase. The increase was primarily attributed to the increase of administrative expenses and selling expenses. The higher administrative expenses were primarily contributable to the consolidation of the financial results of Jinzhou Hanhua Electrical System Co., Ltd. and Jinzhou Karham Electrical Equipment Co., Ltd, audit and assessment costs in complying with Sarbanes-Oxley Act of 2002 and non-cash employee stock option compensation incurred during the third quarter of 2008. Selling expenses constituted 3.1% of sales revenue compared with 2.3% in the 2007 third quarter. The increase of selling expenses was mainly attributable to the increased sales commissions and salaries as well as transportation expenses during the Beijing Olympics. Research and development costs increased to US$459,804 from US$255,086 for the same period in 2007. As a percentage of revenue, research and development costs were 1.2% in the third quarter.

Income before income taxes increased $3.1 million, or 68.1%, to $7.6 million in the third quarter of 2008. As percentage of sales revenue, income before income taxes increased to 19.3% compared with same quarter last year.

Net income increased 72.9% to a quarterly record of US$6.4 million from US$3.7 million in the same quarter of 2007. Fully diluted earnings per share for the third quarter were US$0.24 versus US$0.15 in the 2007 third quarter. As of September 30, 2008, the total shares outstanding on a diluted basis were 26,959,994 shares, as compared to 23,959,994 diluted shares outstanding in the same quarter of 2007.

"We continue our solid growth in the 2008 third quarter generating increased sales from both existing customers and new customers. We also benefited from the growth in export. With emphasis on research and development, we are able to broaden our product lines and expand our market both in China and overseas. We are very confident about our future development." said Chairman and CEO, Mr. Qingjie Zhao.

Financial Condition

As of September 30, 2008, Wonder Auto had US$ 19.9 million in cash and cash equivalents (including US$5.1 million restricted cash), a current ratio of 2.0 to 1, working capital of US$55.8 million and US$18.0 million long-term debt. Shareholders' equity increased to US$98.0 million. As of September 30, the value of property, plant and equipment rose to $33.7 million from $22.5 million at December 31, 2007.

Events Overview

On October 1, 2008, Wonder Auto entered into an equity transfer agreement and acquired the control stake of 65% of Year City Limited's equity, who owns 100% shares of Jinan Worldwide Auto Accessories Company ("Jinan Worldwide"). Jinan Worldwide is currently the largest engine valve and valve tappets manufacturer in China with a customer base including Shanghai VW, FAW, Chery, Geely Auto, Weifang Diesel Engine, and one of the Big Three US auto manufacturers. Through this acquisition, Wonder Auto is expected to enter into Jinan Worldwide's main market-the diesel engine market, and Jinan Worldwide is expected to penetrate into Wonder Auto's main market- the gasoline market. The Company anticipates that this acquisition will not only diversify its product offerings, but also further strengthen its market competitiveness through sharing of resources.

Conference Call

The Company will host a conference call, to be simultaneously Webcast on Tuesday, November 4 at 8:30 a.m. Eastern Standard Time / 9:30 P.M. Beijing Time. A question and answer session will follow the management presentation. Mr. Qingjie Zhao (Chairman & CEO), Mr. Ryan Yuan (CFO), Miss Lydia Zhao (assistant CFO) and Mr. Yuechun Xie (Investor Relations Manager) will be the primary speakers for the call.

To participate, please call the following numbers ten minutes before the call start time for your kind registration:

Phone Number + 1   866 242-1388(North America)
Phone Number + 852 800 968 831(Hong Kong)
Phone Number + 86  10 800 640 0084(China)
Phone Number + 86  10 800 264 0084(China)

Conference ID Number: 71053685

A live webcast of the conference call will be available on the Investor Relations page of Wonder Auto's web site at WONDER AUTO TECHNOLOGIES.