Dear Shareholders:

On behalf of the board of directors, I hereby present the annual report of Brilliance China Automotive Holdings Limited for the year ended 31st December, 2007.

First of all, I am pleased to report that the Group has achieved its goal of returning to profitability in 2007 after experiencing two years of losses attributable to equity holders of the Company. The Group also registered unit sales growth in all of its three main product categories. During 2007, the Chinese auto sector continued to show an impressive growth. A total of 4.7 million sedans were sold domestically, representing a 23.5% increase from the previous year. China's rapid GDP expansion with rising income levels and improving lifestyles had contributed to this growth. The strong market demand has brought about a remarkable expansion in the sale of our Zhonghua and BMW sedans during the year. As a result, the Group achieved revenues of approximately RMB14.1 billion in 2007, representing a 34.9% increase from 2006. This increase in sales, coupled with the implementation of cost saving measures, has led to a turnaround of the Group's performance from a net loss attributable to shareholders of RMB398.4 million in 2006 to net profit attributable to shareholders of RMB97.1 million for 2007.

During the year, the Group continued to enhance the quality and diversity of its products and services. The Group sold 106,770 Zhonghua sedans in 2007, representing a solid 71.4% increase from 62,281 vehicles sold in the previous year. In September 2007, the Group launched the new Kubao, a coupe model to complement the existing Zhonghua brand of products, which was well received by the market. In addition, the Zhonghua brand was the only national auto brand name to be ranked amongst the Top 10 Best Aftersale Service auto brands in China in August 2007 by JD Power, a reputable global marketing information firm that conducts independent customer satisfaction and product quality surveys for the auto industry.

Our minibus continued to maintain its market leading position in 2007. A total of 73,415 minibuses were sold in 2007, representing an increase of 10.8% from the 66,245 units sold in 2006. Unit sales of our mid-price Hiace minibus was encouraging, with a 14.3% increase in volume during the year, whereas the deluxe minibuses maintained steady sales.

The BMW Brilliance joint venture achieved continuing growth in sales volume in 2007. The increased contribution from the joint venture in 2007 was a testament to the relentless commitment from both our joint venture partner and the Group to improve operational efficiency and profitability by increasing the domestic components ratio. With even greater cooperation with our strategic partner planned for 2008 and beyond, we believe the BMW Brilliance JV is well positioned to maintain its market leading position in the increasingly competitive premium sedan segment in China.

Looking ahead to 2008, the Group expects market conditions to be tough. Factors such as rising input costs and oil prices, impact of austerity measures and credit tightening, and the launch of a large number of competitive new models will all create pressures on auto sales in China. To enable the Group to maintain its market share and margins, we plan to launch new models such as the new Junjie FRV and Junjie wagon models in 2008 to further diversify our product mix, increase investments in the development of our engines and new products under the Junjie FRV platform, streamline our operations to improve production efficiency, leverage on volume to achieve supplier cost savings, work with BMW to deepen component localisation for our BMW vehicles (import tariff reduction was achieved across all BMW models in early 2008), and extend our auto business chain downstream into the aftermarket sector. The Group has completed the construction of a 100,000-unit facility catered for the Junjie FRV line of products, and is also in discussion with BMW regarding next phase capacity expansion for our joint venture.

The Group will continue to enrich its product portfolio while actively exploring opportunities to further diversify our business beyond the existing automobile and components manufacturing business. The Group also aims to strengthen our relationships with strategic partners such as BMW, Toyota and other parts and engineering firms worldwide for strategic alliances and partnerships in the long-term development of our business.

Finally, I would like to take this opportunity to express my sincere appreciation to our shareholders and staff for their continued dedication and commitment to the Group.