Company: CAAS
Filing Date: 2025-08-04
Form Type: 424B3
Source: 0001104659-25-073486
Chunk: 42

Company: China Automotive Systems, Inc.
Filing Date: 2025-08-04
Form: 424B3
Chunk 42
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’s business.

The Company may not be able to collect receivables incurred by customers.

The Company currently sells its products on credit
and its ability to receive payment for its products depends on the continued creditworthiness of its customers. Although the Company
has long-term relationships with its major customers, the customer base may change if its sales increase because of the Company’s
expanded capacity. If the Company is not able to collect its receivables, its profitability will be adversely affected.

The Company may be subject to product liability and warranty and recall claims, which may increase the costs of doing business and adversely affect the Company’s financial condition and liquidity.

The Company may be exposed to product liability
and warranty claims if its products actually or allegedly fail to perform as expected or the use of its products results, or is alleged
to result, in bodily injury and/or property damage. The Company started to pay some of its customers’ increased after-sales service
expenses due to consumer rights protection policies of “recall” issued by the Chinese government in 2004, such as the recalling
flawed vehicles policy. Beginning in 2004, automobile manufacturers unilaterally required their suppliers to pay a “3-R Guarantees”
service charge for repair, replacement and refund in an amount of about 1%–5% of the total amount of parts supplied. Accordingly,
the Company has experienced and will continue to experience higher after-sales service expenses. Product liability, warranty and recall
costs may have a material adverse effect on the Company’s financial condition.

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The Company is subject to environmental and safety regulations, which may increase the Company’s compliance costs and may adversely affect its results of operations.

The Company is subject to the requirements of
environmental and occupational safety and health laws and regulations in China. The Company cannot provide assurance that it has been
or will be at all times in full compliance with all of these requirements, or that it will not incur material costs or liabilities in
connection with these requirements. Additionally, these regulations may change in a manner that could have a material adverse effect
on the Company’s business, results of operations and financial condition. The capital requirements and other expenditures that
may be necessary to comply with environmental requirements could increase and become a material expense of doing business.

Non-performance by the Company’s suppliers may adversely affect its operations by delaying delivery or causing delivery failures, which may negatively affect demand, sales and profitability.

The Company purchases various types of equipment,
raw materials and