Wuhan General Group (China), Inc. Announces Strong Fourth Quarter and Full Year 2008 Results

Wuhan, Hubei Province, P.R.C. April 1, 2009 –Wuhan General Group (China), Inc. (Nasdaq: WUHN) ("Wuhan General" or the "Company"), a leading manufacturer of industrial blowers and turbines in China, today announced its fourth quarter and full year financial results ended December 31, 2008. Wuhan General operates through its subsidiaries, Wuhan Blower Co., Ltd. (“Wuhan Blower”), Wuhan Generating Equipment Co., Ltd. (“Wuhan Generating”) and Wuhan Xingelin Machinery Equipment Manufacturing Co., Ltd. (“Wuhan Xingelin”).

Fourth Quarter 2008 Highlights

 Fourth quarter revenue reached $28.1 million, up 26.6% year over year
 Gross profit was $6.5 million, up 24.2% year over year
 Operating income totaled $4.4 million, up 115.9% year over year
 Net income was $1.3 million, or $0.00 per fully diluted share, down from $2.3 million, or $0.05 per fully diluted share in the same quarter last year

Full Year 2008 Highlights

 Net revenue climbed to $118.6 million, up 43.8% from 2007
 Gross profit was $34.2 million, an increase of 36.4% from 2007
 Operating income $22.6 million, up 37.9% from 2007
 Net income was $16.1 million, or $0.26 per fully diluted share, up from $14.9 million, or $0.10 per fully diluted share in 2007
 Excluding $5.4 million non-cash charges related to the Company’s capital markets activities, non-GAAP net income was $21.5 million or $0.35 million per fully diluted share

“2008 was a rewarding year for our Company. Despite the current unprecedented global economic crisis and challenging market conditions, we were able to achieve growth and profitability for fiscal 2008. We realized $118.6 million revenues and $21.5 million net income, excluding non-cash charges related to the capital markets. ,” commented Mr. Jie Xu, CEO of Wuhan General. “We successfully listed the Company’s common stock on the NASDAQ Capital Market and attracted qualified and experienced members to join our senior management team.”

Fourth Quarter 2008 Results

For the fourth quarter ended December 31, 2008, total revenue was $28.1 million, up 26.6% from $22.2 million compared to the same period last year. Wuhan Blower generated $14.6 million of revenue, or 52.0% of the total revenue, compared to $14.4 million, or 64.8% of total revenue in the fourth quarter of 2007. Wuhan Generating contributed $13.5 million, or 48.0% of the total revenue, compared to $7.8 million, or 35.2% of total revenue in the same period last year. The increase was primarily due to the increased demand for anti-pollution equipment in China and revenue from the construction of a thermal electric power plant in Jiangyin, Jingsu Province.

Gross profit for the quarter was $6.5 million, up 24.8% from $5.2 million compared to the fourth quarter of 2007. Gross margin was 23.3%, relatively unchanged from 23.7% compared to the same period in 2007.

Operating expenses totaled $2.2 million, down 31.2% from $3.2 million from the same period prior year. Selling expenses increased 1022.4% to $1.2 million due to increased incentives compensation and entertainment expenses for sales staff in order to increase market shares in this challenging market condition. General and administrative expenses declined 50.3% due to tighter controls implemented by management. As a percentage of revenue, total operating expenses were 7.8% in the fourth quarter of 2008, compared to 14.6% for the same period last year.

Operating income was $4.4 million for the quarter or 15.5% of total revenue, up 115.9% from $2.0 million, or 9.1% of total revenue for the fourth quarter of 2007.

Net income for the fourth quarter of 2008 was $1.3 million, or $0.00 per diluted share, compared to $2.3 million, or $0.05 per diluted share in the same period the prior year.

Full Year 2008 Results

For the fiscal year ended December 31, 2008, revenue increased to $118.6 million, up 43.8%, from $82.5 million from the prior year. Wuhan Blower generated $58.8 million, or 49.6% of total revenue, compared to $44.6 million, or 54.0% of total revenue in 2007. Wuhan Generating contributed $59.8 million, or 50.4% of total revenue, compared to $37.9 million, or 46.0% in 2007. Gross profit for 2008 was $34.2 million, an increase of 36.4% from $25.1 million in 2007. Gross profit as a percentage of revenue decreased slightly to 28.8% for the fiscal year ended December 31, 2008, from 30.4% for the twelve months ended December 31, 2007. Operating income for 2008 was $22.6 million, up 37.9% from $16.4 million in 2007. Operating margin was 19.1% in 2008, compared to 19.9% in 2007. Net income increased to $16.1 million, or $0.26 per fully diluted share, up 8.6% from $14.9 million for 2007, or $0.10 per fully diluted share. Excluding non-cash penalty charges of $5.4 million associated with the Company’s capital market activities, the Company’s non-GAAP net income for 2008 was $21.5 million, or $0.35 per fully diluted share. Fully diluted shares in fiscal year 2008 increased to 47.1 million from 33.6 million in 2007.

Financial Condition

As of December 31, 2008, Wuhan General had $2.8 million in cash compared to $1.0 million as of December 31, 2007 and $28.7 million in working capital with a current ratio of 1.5:1. Short-term bank loans and notes were $35.2 million. At year end, the Company’s total shareholders’ equity stood at $93.6 million, compared to $55.4 million as of December 31, 2007. The Company generated $16.8 million in cash from operating activities, compared to cash used in operating activities of $11.1 million in prior year.

At December 31, 2008, the Company had $41.5 million in accounts receivable versus $31.9 million at December 31, 2007. Wuhan General believes that its payment terms are standard in its industry in China, and it would be at a competitive disadvantage if it made payment schedules more aggressive. Nonetheless, the Company has employed additional resources in collecting on outstanding accounts receivable and believes it has benefited from these measures in registering an increase of $9.6 million in accounts receivable despite an increase in sales of $36.1 million in 2008.

Business Outlook

“Along with the general slowdown of the Chinese economy, we have seen our sales soften in the first quarter of 2009. However, we believe Wuhan General is well positioned to weather the current economic crisis due to our strong track record with customers of producing high quality blowers and turbines. We will continue to identify opportunities to expand our market share among industries that require industrial blowers and turbines,” stated Mr. Xu.

Despite a slowdown in sales during the first quarter, Wuhan General expects sales to strengthen in the second half of 2009 as the effects of the Chinese government’s stimulus plan begin to impact the domestic economy. In particular, spending on environmentally friendly technology and products are expected to strengthen. This will create significant opportunities for both Wuhan General’s turbine and blower businesses, whose products are used as part of pollution reduction and clean energy systems.

For 2009, Wuhan General intends to offer more competitive prices to its existing customers. Management will also strengthen its sales effort into new areas such as sewage treatment and subway aeration, both of which are expected to see growth due to the emphasis of the government’s stimulus package on infrastructure development.

Conference Call

The Company will host a conference call at 9:00 a.m. EDT on Wednesday, April 1, 2009 to discuss the fourth quarter and full year 2008 results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 800-688-0796. International callers should dial 617-614-4070. When prompted by the operator, mention conference passcode 571 499 58. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Wednesday, April 1, 2009 at 11:00 a.m. EDT. To access the replay, please dial 888-286-8010 and enter passcode 75724878. International callers should dial 617-801-6888 and enter passcode 75724878.

About Wuhan General Group (China), Inc.

Wuhan General (Nasdaq: WUHN) designs, manufactures and distributes industrial blowers, turbines and parts for industrial blowers and electrical equipment. Blowers are used in a variety of applications where large amounts of air have to be moved. Examples include electricity generation, air pollution control, and ventilation and aeration in subways and vehicular tunnels, mines, and sewage treatment facilities. The Company’s steam and water turbines are used for electricity generation in coal, oil, nuclear, and hydroelectric power plants. The Company is located in Wuhan, China, a major industrial city of 8 million people strategically located in the south-central part of China.

Safe Harbor Statement

Certain statements in this press release, including statements regarding future demand for our products, our ability to generate business in the current economic climate, our ability to expand our market share in our current industries and into new growth areas, the effects of the Chinese government’s stimulus plan on our businesses and our future financial performance, may be forward-looking in nature or “forward-looking statements,” as defined by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties, including all business uncertainties relating to vulnerability of our business to general economic downturn, operating in the People’s Republic of China (PRC) generally and the potential for changes in the laws of the PRC that affect our operations, our failure to meet or timely meet contractual performance standards and schedules and other factors that may cause actual results to be materially different from those described in such forward-looking statements. Certain of these risks and uncertainties are or will be described in greater detail in our filings with the Securities and Exchange Commission. These forward-looking statements are based on Wuhan General’s current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting Wuhan General will be those anticipated by the Company. Wuhan General undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.