China Automotive Hits Record Profit on High-Tech Steering, Global Push

WUHAN, China – April 22, 2026 – China Automotive Systems, Inc. (NASDAQ: CAAS) today announced a landmark fiscal year, posting record-breaking net sales and earnings per share for 2025. The performance underscores the success of a dual-pronged strategy: a decisive pivot towards high-technology steering systems and an aggressive expansion of its global footprint.

The leading power steering supplier reported annual net sales surged 17.6% to a record $765.7 million. More impressively, diluted net income per share climbed 43.4% to an all-time high of $1.42, signaling robust profitability and operational efficiency that has caught the attention of the automotive industry.

Steering Toward Advanced Technology

The engine behind CAAS's record year is its accelerating transition to more sophisticated and higher-margin products. Sales of its advanced Electric Power Steering (EPS) systems grew by a remarkable 25.5%, now accounting for 41.5% of total revenue, up from 38.9% in 2024. This strategic shift is crucial as the global auto industry moves rapidly towards electrification and advanced driver-assistance systems (ADAS), where EPS is a foundational technology.

"The 2025 year was marked by higher sales growth, improved profitability, strengthened finances, higher cash flow from operations and organizational changes," said Qizhou Wu, Chief Executive Officer of CAAS. He emphasized the product mix evolution, noting, "Our traditional hydraulic steering products grew by 12.6% in 2025 as our more advanced electric power steering ('EPS') grew by 25.5%."

This focus on innovation yielded several key milestones in 2025. The company’s Jingzhou Henglong subsidiary secured its first-ever product order for Rack-Assist EPS (R-EPS) from a major European automobile manufacturer, a significant validation of its technology on the world stage. R-EPS is a critical component for modern passenger cars and SUVs, enabling precise control and integration with safety features like lane-keeping assist.

Furthermore, CAAS began mass production of its L2+ standard electro-hydraulic steering system for heavy-duty commercial vehicles. The company also launched an active rear-wheel steering system, a feature once confined to luxury vehicles, which enhances vehicle stability and maneuverability at different speeds. These advancements are supported by a substantial 63% year-over-year increase in research and development expenses, which totaled $45.1 million for the year.

Expanding Horizons Beyond China

While capitalizing on the strength of the domestic Chinese market, CAAS has made significant strides in cementing its role as a global tier-1 supplier. A pivotal move in 2025 was the completion of its corporate redomiciliation to the Cayman Islands. Management believes this structural change will better position CAAS as a global entity, enabling more flexible resource allocation and a sharper focus on international operations and product development.

"We believe this action will pave the way for CAAS to better position itself as a global company," Wu commented on the move.

This global ambition is reflected in its sales figures. Net sales to North American customers, including major OEMs like Ford and Stellantis, rose 15.3% to $121.6 million. The company's operations in Brazil also reported powerful growth, with net sales increasing by 34.7%.

Looking to future growth, CAAS established a major strategic foothold in the burgeoning ASEAN market. In November 2025, its Hubei Henglong subsidiary signed a memorandum of understanding with KYB-UMW Sdn Bhd to jointly produce EPS systems in Malaysia. The partnership will initially supply Perodua, Malaysia's largest automaker, with plans to expand across the region's OEM and aftermarket sectors.

A Fortified Financial Position

The strategic successes are mirrored by a dramatically strengthened financial foundation. Perhaps the most telling indicator of the company's underlying health is the monumental increase in cash flow. Net cash provided by operating activities skyrocketed to $111.6 million in 2025, a more than tenfold increase from the $9.8 million generated in 2024. This leap demonstrates a powerful ability to convert profits into cash, reducing reliance on external financing and providing substantial capital for reinvestment.

Chief Financial Officer Jie Li highlighted the robust financial health. "Our record sales and net profits generated much higher cash flow from operations and free cash flow in 2025," Li stated. "Cash and cash equivalents, pledged cash and short-term investments and long-term time deposit rose to $256.7 million at year end."

The shift to higher-value products also directly improved profitability. Gross margin for the year expanded to 19.0% from 16.8% in 2024, a clear sign that the technology-focused strategy is yielding better returns. Despite the strong performance, some market indicators suggest the company may be undervalued. Its price-to-earnings ratio of approximately 3.9x is significantly lower than the U.S. auto components industry average, even as some analysts set price targets that suggest considerable upside from its current stock price.

Performance and Outlook

The company finished the year on a high note, with fourth-quarter net sales growing 21.4% to $229.2 million. Net income attributable to shareholders more than doubled to $18.4 million, or $0.61 per share, compared to $9.1 million, or $0.30 per share, in the same period of 2024. The strong quarterly performance was driven by a favorable product mix and high demand across both passenger and commercial vehicle segments.

Building on this momentum, CAAS management has issued optimistic guidance for the coming year. The company is targeting total revenue of $810.0 million for the fiscal year 2026, indicating confidence in its ability to continue its growth trajectory through technological leadership and expanding global reach.