Greetings and welcome to the China Automotive Systems Second Quarter 2013 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dixon Chen with Grayling Global. Thank you, Mr. Chen. You may begin.

Thank you. Thank you for joining us today and welcome to China Automotive Systems 2013 second quarter and six months conference call. My name is Dixon Chen; I am with Grayling, China Automotive Systems’ U.S. Investor Relations Advisor. Joining us today are Mr. Hanlin Chen, Chairman; Mr. Qizhou Wu, Chief Executive Officer; and Mr. Jie Li, Chief Financial Officer; and Mr. Daming Hu, Chief Accounting Officer. They will be available to answer questions later in the conference call and we will help with translations. Before we begin, I would like to remind all listeners that throughout this call, we may make statements that may contain forward-looking statements. Forward-looking statements represent our estimate and assumptions only as of the date of this call. As a result, the company’s actual results could differ materially from those contained in this forward-looking statement due to a number of factors including those described under the heading Risk Factors in the company’s Form 10-K Annual Report for the year-end December 31, 2012, and under the heading Risk Factors in the company's Form 10-Q for the three months ended March 31, 2013 and June 30, 2013 filed with the SEC, and the documents subsequently filed with the company from time-to-time with the SEC. The company expressly disclaims any duty to provide updates to any forward-looking statements made on this call whether as a result of new information, future events or otherwise. Now I will provide a brief overview and summary of 2013 second quarter results and then I will turn the call to management and conduct the question-and-answer session. The 2013 second quarter results are unaudited under U.S. GAAP. For our call today, I will review all the financial results in U.S. dollars. Let me walk you some industry information, our sales increased by 21.8% to a…

Thank you. (Operator Instructions) Our first question today is coming from Bill Gregozeski from Mont Blanc Capital. Please proceed with your question.

Hello, Bill.

Can you hear me?

Yes, hello.

Okay. On sales to Chery it looked like they were down quite a bit [inaudible] -- where do you guys see sales to Chery going in the foreseeable future?

[Foreign Language] Okay. There’s two reasons - two factors affecting our sales to, decline in our sales to Chery. First is Chery their own business they are experiencing a year-over-year sales decline. And secondly we went through a management change in our Wuhu Henglong facility. We were dissatisfied with their performance and so we decided to change the management team and put in a bit more experienced team to run that division. So we expect the second half of the year should pick up more sales from Chery.

Okay, all right. And on the EPS [electronic power steering] business where - what kind of sales did you do for that in the second quarter, and how do you guys see that ramping up?

[Foreign language] Okay, second quarter we sold about 40,000 units of EPS systems and that represented a 100% year-over-year increase for the second quarter. So second quarter 2012 we sold only 20. And we're still on track to achieve our 200,000 units sales for the entire 2013, and that basically tells you our second half of year we should see a noticeable increase in EPS sales.

Okay, all right. And for Chrysler, how many production lines you guys have up and running for them now?

[Foreign Language] Okay. We are currently running full capacity for two production lines that’s dedicated to Chrysler products; most lines now we're going to over time stage. So as you see the order books has been quite full. Our third line is coming online some time towards the end of the year.

Okay

Third production line.

All right. And on the gross margin side, you had cited higher sales as the reason for the higher margin what's the utilization rate now and where do you guys think you can get the margins?

[Foreign Language] The utilization rate for the passenger vehicles steering is right now running at 90%. However, commercial vehicle steering product, our production line, the utilization rate is only 85%. So we believe there are some room for increase, actually for both but more on the commercial vehicle sector.

Okay, do you see margins as increasing throughout the year or staying along the current level?

[Foreign Language] So we expect the gross margin will remain this level throughout a year. It's mainly due to towards the middle of the year we usually do a discount for our main customers. So that will offset the utilization rates, the benefit coming from the higher utilization rate. We're doing that price adjustment, mainly focusing on increasing market share. So that’s helping our main target throughout the year now.

Okay. On the selling expense and the G&A, can you kind of talk about how much of each of those is fixed and how much is ties to sales?

[Foreign Language] On the - you asked for SG&A, let’s look at selling expenses first, it’s about 70% is variable based on [higher net] [ph] sales and that will change and then about 30% is fixed. Now if you look turn into the G&A expense is about half-and-half, so half of them will be fixed.

Okay, all right. And my last question was with more large cities adding the limits on new licenses, how do you guys see that in general in China back in the passenger market?

[Foreign Language] Okay. So actually we have seen the growth driver going forward will be interior China mainly the tier 3 and tier 4 cities in mid and west part of China mainly due to their higher GDP growth and the fast growing disposable income of those residents. So a lot of those purchases for the vehicles actually already coming from those regions. So we remain optimistic these will be our growth driver.

Okay, all right. Thank you very much.

(Operator Instructions) There are no questions at this time. I would like to turn the floor back over to management for any further or closing comments.

Thank you for attending China Automotive Systems second quarter 2013 report. We look forward to speaking with you. Thank you.