Commercial Vehicle Market in China

• 636,000 heavy trucks sold in China in 2009, and over 1 million heavy trucks sold in 2010 (up 60% YoY)
• Heavy trucks = cargo transporting vehicles / semi- and full-trailer trucks
• Short replacement cycle: useful life of heavy trucks in China approx. 3-4 years
• Huge downstream demand, increasing domestic consumption
• Heavy truck financing is a highly fragmented market—opportunity for AutoChina to establish itself as a market leader
• Customer base is predominantly entrepreneurs that carry a wide variety of goods—e.g., freight, agricultural products, raw materials

Key growth drivers:
• China’s new five-year plan focused on domestic consumption and continued highway infrastructure
• Cargo volume transported by road estimated to have risen 8.0% to 1.88 billion tons in 2010, growing an average of 8.5% each year thereafter until 2014—a result of infrastructure spending o Facilitated by government plans to extend total length of China’s roads to 3 million km. by 2020
• Government’s new cash-for-vehicles program for 2011
•  Harmonization of Chinese truck emission rules with those of the U.S. and Europe being introduced in stages between 2010 and 2012