Announcement on the Share Swap Absorption Merger of Weichai Power Co., Ltd. and Xianghuoju Automobile Group Co., Ltd. and Implementation of Equity Division Reform Plan

1. Stock Code: 000549 Stock Abbreviation: S Xianghuoju Announcement No.: 2007-012

Announcement on the Share Swap Absorption Merger of Weichai Power Co., Ltd. and Xianghuoju Automobile Group Co., Ltd. and Implementation of Equity Division Reform Plan

The board of directors of the company guarantees that the content of this announcement is true, accurate, and complete, and bears joint responsibility for any false records, misleading statements, or significant omissions.

Important Notice

1. The equity division reform plan of Xianghuoju Automobile Group Co., Ltd. (hereinafter referred to as "Xianghuoju" or "the Company") adopts the method of share swap absorption merger by issuing A shares of Weichai Power Co., Ltd. (hereinafter referred to as "Weichai Power"). On the share change registration date for the share swap compensation (April 18, 2007), all circulating shareholders of the Company will receive 0.35 shares of the Company for every 10 shares held, provided by Zhuzhou State-owned Assets Investment and Operation Co., Ltd. (hereinafter referred to as "Zhuzhou State Assets"). All circulating shareholders registered on the share registration date for the share swap absorption merger (April 20, 2007) will exchange their shares at a ratio of 3.53:1 for the A shares issued by Weichai Power (equivalent to 0.283286119 shares of Weichai Power A shares for every 1 share of Xianghuoju A shares). Weichai Power (Weifang) Investment Co., Ltd. (hereinafter referred to as "Weichai Investment") will not pay or accept compensation and will not participate in the share swap, and will complete the cancellation procedure after the equity division reform is completed.

2. The equity division reform sets a cash option, which was open for declaration from December 20 to 22, 2006. On December 26, 2006, the Company announced that a total of 250 shares had been effectively declared for the cash option. On the implementation date of the cash option (April 17, 2007), CITIC Trust will acquire shares of Xianghuoju from shareholders exercising the cash option and pay a cash compensation of 5.05 CNY per share to those shareholders. After the cash option is implemented, shareholders who exercised the cash option will no longer hold Xianghuoju shares, and CITIC Trust, as the holder of those shares, will receive the share compensation and proceed with the share swap.

3. The implementation date of the cash option for the equity division reform: April 17, 2007.

4. The share change registration date for the share swap compensation: April 18, 2007.

5. The date for the share compensation to be credited: April 19, 2007.

6. The share registration date for the share swap absorption merger: April 20, 2007.

7. The date for the share swap to be credited: April 23, 2007.

8. After the completion of the share swap compensation and absorption merger, the Company's stock will cease trading, and Zhuzhou State Assets and all circulating shareholders of the Company will become A shareholders of Weichai Power. Their shares will continue to be traded after Weichai Power A shares are listed on the Shenzhen Stock Exchange.

9. The listing date of Weichai Power A shares will be announced separately.

Approval of the Equity Division Reform Plan

The equity division reform plan of the Company and the share swap absorption merger plan with Weichai Power were approved at the Company's second extraordinary general meeting of 2006 held on December 29, 2006, as well as at the shareholder meetings of Weichai Power. The plan for Weichai Power to issue A shares for the absorption merger of the Company was approved by the China Securities Regulatory Commission on March 30, 2007.