China Auto Logistics Reports 2013 Second Quarter Results; Also Provides Update on Previously Announced Letter of Intent to

China Auto Logistics Reports 2013 Second Quarter Results; Also Provides Update 
on Previously Announced Letter of Intent to Acquire
Tianjin Automall 
TIANJIN, CHINA -- (Marketwired) -- 08/14/13 --  
Auto Sales Slipped in the Quarter as New Government Enforcement
Procedures Reduced Imported Vehicle Availability and Increased
Customer Costs; Company Sees Easing Ahead and is Continuing
Aggressive Pricing Strategy 
Informal Discussions With Banks Are Proceeding for Financing Automall
Acquisition for Estimated Purchase Price of $65 Million to $130
 $16.13 Million (USD) Refundable Deposit Was Made Toward the
Acquisition in June 
2013 Second Quarter Investor Conference Call Scheduled for Thursday,
August 15th at 8:00am ET 
China Auto Logistics Inc. (the "Company") (NASDAQ: CALI), a top
seller in China of luxury imported automobiles, a leading provider of
auto-related services, and developer and operator of a leading
automobile portal and auto-related websites, today reported new
enforcement procedures for imported vehicles, and a slower economic
environment, contributed to a 27% year over year decline in Auto
Sales in its second quarter ended June 30, 2013. While instituting
programs it believes will ease this situation, the Company also
continued its aggressive pricing strategy aimed at maintaining
industry leadership. The resulting anticipated reduction in profit
margins, combined with reduced sales volume, led to an approximately
51% decrease in year over year net income for the quarter despite
another solid performance by the Company's high margin Financing
Services business.  
In line with the Company's strategy to expand its higher margin
auto-related services businesses, discussions and due diligence have
continued with respect to the non-binding Letter of Intent signed in
May to acquire and operate the Airport International Automall in
Tianjin. The Company reported it made a refundable deposit of
$16,122,531 U.S. dollars (RMB 100 million) on the acquisition in
June. In the event the acquisition is completed, it anticipates a
purchase price of between $65 million (USD) and $130 million (USD)
for the Airport International Automall and the land use rights on
which it is situated. Additionally, the Company believes it has the
informal backing of banks with which it has engaged in discussions
regarding mortgage financing to acquire the automall. It believes
this financing could be coupled with cash from the Company's
operating cash flow and/or installment payments to the seller which
would not entail any dilution of the Company's equity to complete the
Generating Bottom Line Growth 
Mr. Tong Shiping, CEO and Chairman of the Company, commented, "With
the expectation that imported luxury auto sales in China will
continue to exceed the anticipated growth in auto sales overall, we
are determined to maintain our leadership in this niche and are
continuing our aggressive pricing strategy. We believe by sacrificing
some profits over the near term, we will attain a much stronger
position in the future." 
"With respect to the problems posed by new procedures and
requirements for imports," Mr. Tong added, "we are working with our
customers and our suppliers to normalize the situation, while also
anticipating further strengthening of the economic environment." 
"Meanwhile," he continued, "our key focus continues to be on
generating bottom line growth through the expansion of our more
profitable auto related services. If successful, we believe acquiring
the Airport International Automall would be a significant step in
this direction." 
Financial Highlights 

--  Net revenues in the 2013 second quarter declined 27% to $110,256,310
    compared with $150,047,968 in the same period last year. The sharp
    decline in Auto Sales in the quarter, as explained below, was the key
    reason for the decline in overall revenues. The remaining contributors
    to revenues were the Company's auto related services businesses, led
    by Financing Services and also including Automobile Value-added
    Services, Automall Management Services and Web-based Advertising
    Services. During the quarter, the contribution from Web-based
    Advertising Services continued to shrink in line with the Company's
    strategic decision to utilize its industry leading websites to provide
    news and information to auto dealers and their customers to help build
    the Company's other businesses, rather than to generate revenue from
    online advertising.

--  The gross profit margin in the 2013 second quarter was 1.65% compared
    with 2.03% in the second quarter of 2012. With lower auto sales in the
    quarter, income from operations decreased 48.82% compared with a year
    earlier to $1,262,939. The largest contribution to operating income in
    the 2013 second quarter of $900,190 came from Financing Services,
    followed by $227,392 from Sales of Automobiles.

--  Net income attributable to shareholders in the 2013 second quarter
    declined 51.47% to $800,484, or $0.22 per share, compared with
    $1,649,461, or $0.45 per share, in the same period last year. Diluted
    weighted average number of common shares in both periods was

--  For the six months ended June 30, 2013, net revenues were $217,881,376
    compared with $257,493,554, a decline of 15.38%. Net income
    attributable to shareholders in the first six months of 2013 was
    $1,807,819, or $0.49 per share, down 44.05% from $3,230,938, or $0.88
    per share a year earlier. Diluted weighted average number of common
    shares outstanding in both periods was 3,694,394.

Segment Review 

--  In the 2013 second quarter, the Company sold 1,240 automobiles
    compared with 1,675 automobiles a year earlier resulting in a volume
    decrease of 26%. Average unit selling prices per vehicle in the same
    periods decreased slightly to $87,000 from $88,000. There were a few
    key reasons for the decline in addition to the somewhat softer
    economic environment. In particular, the Company's suppliers
    experienced delays importing vehicles that were beyond their control,
    and new inspection standards were implemented by the PRC's customs
    department. These factors prolonged the Company's purchasing cycles
    and thinned its inventories so that customers' demands could not
    always be met. The Company is actively attempting to overcome these
    hurdles by working more closely with suppliers to ensure prompt
    deliveries in order to maintain a stable inventory level.

Additionally, beginning in March, 2013, the enforcement of rules
relating to the registration of imported vehicles was tightened
requiring alterations to certain imported vehicles. This caused
approvals to be delayed and imposed additional costs on customers.
The Company has begun a program of providing advice to its customers
regarding alteration requirements at the registration offices in each
province, and believes this will significantly ease customer
In order to continue to expand its market share, in view of forecasts
for continuing growth in luxury imported auto sales over the next few
years, as well as increased competition, the Company has continued to
implement a very aggressive pricing policy. The resulting decrease in
gross margins on auto sales is expected to continue through the
remainder of 2013, as the Company aims to further weaken competitors
while providing its customers with the lowest possible prices. 

--  Financing Services remained strong in the second quarter, as reflected
    by the 8.6% growth in fee revenue compared with the same quarter last
    year. During this time gross margin increased to 62.57% from 51.14%
    helped by the introduction of new types of financing and higher fees.
    Interest income in the 2013 second quarter declined to $672,185 from
    $989,723 in the year earlier quarter in line with the decline in
    prevailing interest rates. As of June 30, 2013, the Company had
    approximately $60 million drawn on the $138 million lines of credit it
    has established with some of China's leading commercial banks. In
    addition, as of June 30, 2013, the Company had $16.9 million of short
    term foreign currency borrowings with Agricultural Bank of China. In
    mid-June, while some banks in China experienced liquidity issues,
    China's Central Bank pledged assistance to any banks facing cash
    shortages. The Company has not been notified by any bank it works with
    about any changes in its credit lines, or any changes in requirements
    to maintain good relationships with these banks. Further, the Company
    does not foresee any difficulty at this time in obtaining credit lines
    and loan facilities from its banks.

--  As previously noted, the contributions to revenues and operating
    income in the 2013 second quarter from the Company's Web-based
    Advertising Services declined year over year as anticipated, and a
    slight year over year increase in operating income in Automall
    Management Services was solely the result of exchange rate
    differences. Automobile Value Added Services declined compared with
    the prior year's second quarter as its revenues tend to fluctuate.

Mr. Tong concluded, "We see luxury imported auto sales outperforming
the anticipated growth in China's auto sales over the next few years,
but with stronger competition, at least through the current year, we
do not anticipate margin expansion. Our continuing goal is to offset
this with growth in our other services businesses where we see
significant possibilities for profit growth, especially as the
economy stabilizes further. Near term, we remain focused on achieving
further progress on our announced acquisition plans which, if
successful, should clearly demonstrate the soundness of our growth
Conference Call Invitation 
The Company will discuss 2013 second quarter results during a live
conference call and webcast on Thursday, August 15th at 8:00am ET.  
To participate in the call, interested participants should call
1-888-846-5003 when calling within the United States or
1-480-629-9856 when calling internationally. Please ask for the China
Auto Logistics 2013 Second Quarter Earnings Conference Call,
Conference ID: 4635648. There will be a playback available until
August 22, 2013. 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: 4635648.  
This call is being webcast by ViaVid Broadcasting and can be accessed
by clicking on this link
or at ViaVid's website at 
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, one of the
leading automobile portals in China, which integrates the Company's
websites that provide extensive information and news to 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 
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 BALANCE SHEETS                    
                                                 June 30, 2013  December 31,
                                                  (Unaudited)       2012    
                                                 ------------- -------------
Current assets                                                              
  Cash and cash equivalents                      $   3,290,206 $   8,888,749
  Restricted cash                                   50,168,435    27,015,351
  Receivables related to financing services         62,634,088    57,134,815
  Notes receivable                                           -     1,587,024
  Inventories                                       14,576,119    27,141,004
  Advances to suppliers                             67,254,233    43,019,343
  Prepaid expenses                                      10,392        19,071
  Value added tax refundable                           194,836       338,513
  Deferred tax assets                                  728,957       714,161
                                                 ------------- -------------
    Total current assets                           198,857,266   165,858,031
Property and equipment, net                            274,313       314,126
Acquisition deposit                                 16,199,054             -
Other assets                                                 -        23,559
                                                 ------------- -------------
    Total Assets                                 $ 215,330,633 $ 166,195,716
                                                 ------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY                                        
Current liabilities                                                         
  Bank overdraft                                 $   2,420,893 $           -
  Lines of credit related to financing services     75,475,013    51,528,018
  Short term borrowings                             22,316,497    19,673,128
  Accounts payable                                     630,424             -
  Notes payable to suppliers                        12,959,243    12,696,196
  Accrued expenses                                     317,771       356,114
  Customer deposits                                 35,378,062    19,131,420
  Deferred revenue                                     205,902       241,598
  Due to shareholders                                2,200,839     2,156,166
  Due to director                                      506,116       512,023
  Income tax payable                                   398,042       400,932
                                                 ------------- -------------
    Total current liabilities                      152,808,802   106,695,595
                                                 ------------- -------------
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, 3,694,394 shares issued                               
   and outstanding as of June 30, 2013 and                                  
   December 31, 2012                                     3,694         3,694
  Additional paid-in capital                        21,994,074    21,994,074
  Accumulated other comprehensive income             7,138,066     5,923,398
  Retained earnings                                 32,814,228    31,006,409
                                                 ------------- -------------
    Total China Auto Logistics Inc.                                         
     shareholders' equity                           61,950,062    58,927,575
Noncontrolling interests                               571,769       572,546
                                                 ------------- -------------
    Total equity                                    62,521,831    59,500,121
                                                 ------------- -------------
    Total liabilities and shareholders' equity   $ 215,330,633 $ 166,195,716
                                                 ------------- -------------
                          CHINA AUTO LOGISTICS INC.                         
                    Three Months Ended June 30,   Six Months Ended June 30, 
                   ----------------------------  -------------------------- 
                        2013           2012       
   2013          2012     
                   -------------  -------------  ------------  ------------ 
Net revenue        $ 110,256,310  $ 150,047,968  $217,881,376  $257,493,554 
Cost of revenue      108,441,227    146,999,242   213,838,574   250,914,243 
                   -------------  -------------  ------------  ------------ 
    Gross profit       1,815,083      3,048,726     4,042,802     6,579,311 
                   -------------  -------------  ------------  ------------ 
  Selling and                                                               
   marketing             192,808        182,713       362,842       428,390 
  General and                                                               
   administrative        359,336        398,519       952,699     1,239,795 
                   -------------  -------------  ------------  ------------ 
     expenses            552,144        581,232     1,315,541     1,668,185 
                   -------------  -------------  ------------  ------------ 
Income from                                                                 
 operations            1,262,939      2,467,494     2,727,261     4,911,126 
                   -------------  -------------  ------------  ------------ 
Other income                                                                
  Interest income         20,358         15,308       242,646        28,672 
  Interest expense      (142,439)      (140,620)     (219,075)     (226,644)
  Loss on disposal                                                          
   of property and                                                          
   equipment                   -        (26,478)            -       (72,074)
  Foreign exchange                                                          
   loss                  (20,219)             -      (186,370)            - 
  Miscellaneous                -           (114)            -          (114)
                   -------------  -------------  ------------  ------------ 
    Total other                                                             
     expenses           (142,300)      (151,904)     (162,799)     (270,160)
                   -------------  -------------  ------------  ------------ 
Income before                                                               
 income taxes          1,120,639      2,315,590     2,564,462     4,640,966 
Income taxes             321,148        663,084       756,648     1,399,673 
                   -------------  -------------  ------------  ------------ 
Net income               799,491      1,652,506     1,807,814     3,241,293 
Less: Net income                                                            
 attributable to                                                            
                            (993)         3,045            (5)       10,355 
                   -------------  -------------  ------------  ------------ 
Net income                                                                  
 attributable to                                                            
 shareholders of                                                            
 China Auto                                                                 
 Logistics Inc.                                                             
                   $     800,484  $   1,649,461  $  1,807,819  $  3,230,938 
                   =============  =============  ============  ============ 
Earnings per share                                                          
 attributable to                                                            
 shareholders of      
 China Auto                                                                 
 Logistics Inc. -                                                           
 basic and diluted                                                          
                   $        0.22  $        0.45  $       0.49  $       0.88 
                   =============  =============  ============  ============ 
Weighted average                                                            
 number of common                                                           
  Outstanding -                                                             
   basic and                                                                
                       3,694,394      3,694,394     3,694,394     3,694,394 
                   =============  =============  ============  ============ 
                          CHINA AUTO LOGISTICS INC.                         
                                                  Six Months Ended June 30, 
                                                     2013          2012     
                                                 ------------  ------------ 
Cash flows from operating activities                                        
Net income                                       $  1,807,814  $  3,241,293 
Adjustments to reconcile net income to net cash                             
 provided by (used for) operating activities                                
Depreciation on property and equipment                 56,661        84,153 
Amortization on intangible assets                           -       119,389 
Loss on disposal of property and equipment                  -        72,074 
Changes in operating assets and liabilities:                                
Restricted cash                                   (19,633,033)   (1,122,831)
Accounts receivable - trade                                 -        66,124 
Receivables related to financing services          (4,444,767)   18,782,833 
Notes receivable                                    1,631,363    (4,767,685)
Inventories                                        12,896,225)   (1,953,934)
Advances to suppliers                             (22,846,983)   (6,954,361)
Prepaid expenses, other current assets and other                            
 assets                                                72,991        19,490 
Value added tax receivable                            145,902      (658,126)
Accounts payable                                      624,299       648,174 
Line of credit related to financing services       22,862,005)  (27,457,158)
Notes payable to suppliers                                  -    19,044,809 
Accrued expenses                                      (43,416)     (136,701)
Value added tax payable                                (1,572)            - 
Customer deposits                                  15,626,790   (10,321,412)
Deferred revenue                                      (40,399)     (124,887)
Income tax payable                                    (12,445)     (131,897)
Deferred tax liability                                      -       (30,049)
                                                 ------------  ------------ 
Net cash provided by (used in) operating                                    
 activities                                         8,701,435   (11,580,702)
                                                 ------------  ------------ 
Cash flows from investing activities                                        
Purchase of property and equipment                    (10,873)       (1,958)
Acquisition deposit                               (16,122,531)            - 
                                                 ------------  ------------ 
Net cash used in investing activities             (16,133,404)       (1,958)
                                                 ------------  ------------ 
Cash flows from financing activities                                        
Bank overdraft                                      2,409,457             - 
Proceeds from short-term borrowings                22,152,978     6,242,480 
Repayments of short-term borrowings               (19,944,736)     (848,538)
Increase in restricted cash related to short-                               
 term borrowings                                   (2,866,586)            - 
Proceeds from director                                402,203       699,086 
Repayments to director                               (396,537)     (200,336)
                                                 ------------  ------------ 
Net cash flows provided by financing activities     1,756,779     5,892,692 
                                                 ------------  ------------ 
ct of exchange rate change on cash                 76,647         3,519 
Net decrease in cash and cash equivalents          (5,598,543)   (5,686,449)
Cash and cash equivalents at the beginning of                               
 period                                             8,888,749     8,184,793 
                                                 ------------  ------------ 
Cash and cash equivalents at the end of period   $  3,290,206  $  2,498,344 
                                                 ------------  ------------ 
Supplemental disclosure of cash flow information                            
Interest paid                                    $  1,538,774  $  2,343,553 
                                                 ------------  ------------ 
Income taxes paid                                $    744,203  $  1,530,800 
                                                 ------------  ------------ 

Sun Jiazhen  
Ken Donenfeld
DGI Investor Relations Inc. 
Tel: 212-425-5700
Fax: 646-381-9727 
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