**UNITED      STATES**
**SECURITIES        AND EXCHANGE COMMISSION **

**FORM        10-Q **

| x | QUARTERLY                    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT                    OF 1934                    for the quarterly period ended March 31,                    2008 |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o | TRANSITION                    REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
|---|------------------------------------------------------------------------------------|

**SORL        AUTO PARTS, INC.**

| DELAWARE                                                                       | 30-0091294                                         |
|--------------------------------------------------------------------------------|----------------------------------------------------|
| (State                  or other jurisdiction of incorporation ororganization) | (IRS                  Employer Identification No.) |

----

----

| Large                  Accelerated Filer o | Accelerated                  Filer o | Non-Accelerated                  Filer o  | Smaller                  Reporting Company x |
|-------------------------------------------------|-------------------------------------------|------------------------------------------------|---------------------------------------------------|

**APPLICABLE        ONLY TO CORPORATE ISSUERS **

**18,279,254        **

----

SORL        AUTO        PARTS, INC. 

|                      |                                                                                                                                                                                       |     | **Page** |
|---------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|----------|
|                      |                                                                                                                                                                                       |     |     |
| PART                  I.  | FINANCIAL                  INFORMATION (Unaudited)                                                                                                                                         |     | 1        |
|                      |                                                                                                                                                                                       |     |     |
| Item                  1.  | Financial                  Statements:                                                                                                                                                     |     | 1        |
|                      |                                                                                                                                                                                       |     |     |
|                      | Condensed                  Consolidated Balance Sheets as of March 31, 2008 (Unaudited) and                  December                  31, 2007 (Audited)                                  |     | 1        |
|                      |                                                                                                                                                                                       |     |     |
|                      | Condensed                  Consolidated Statements of Operations and Comprehensive Income                  (Unaudited)                  for the Three Months Ended March 31, 2008 and 2007 |     | 2        |
|                      |                                                                                                                                                                                       |     |     |
|                      | Condensed                  Consolidated Statements of Cash Flows (Unaudited) for the Three                  Months                  Ended March 31, 2008 and 2007                          |     | 3        |
|                      |                                                                                                                                                                                            |     |     |
|                      | Condensed                  Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three                  months                  ended March 31, 2008 and 2007          |     | 4        |
|                      |                                                                                                                                                                                       |     |     |
|                      | Notes                  to the Condensed Consolidated Financial Statements (Unaudited)                                                                                                      |     | 5        |
|                      |                                                                                                                                                                                       |     |     |
| Item                  2.  | Management’s                  Discussion and Analysis or Financial Condition and Results of Operations                                                                               |     | 15       |
|                      |                                                                                                                                                                                       |     |     |
| Item                  3.  | Quantitative                  and Qualitative Disclosures About Market Risk                                                                                                                |     | 21       |
|                      |                                                                                                                                                                                       |     |     |
| Item                  4.  | Controls                  and Procedures                                                                                                                                                   |     | 22       |
|                      |                                                                                                                                                                                       |     |     |
| PART                  II. | OTHER                  INFORMATION                                                                                                                                                         |     | 23       |
|                      |                                                                                                                                                                                       |     |     |
| Item                  6.  | Exhibits                                                                                                                                                                                   |     | 23       |
|                      |                                                                                                                                                                                       |     |     |
| SIGNATURES                |                                                                                                                                                                                       | 24  |

----

**PART        I. FINANCIAL INFORMATION**

**ITEM        1. FINANCIAL STATEMENTS**

**SORL        Auto Parts, Inc. and Subsidiaries**

**Consolidated        Balance Sheets**

**March        31, 2008 and December 31, 2007**

|                                                                                                                                                                                                                  |   | **31-Mar-08**   |                  | **31-Dec-07** |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|-----------------------|---------------|---------|
|                                                                                                                                                                                                                  |   | **(Unaudited)** |                  | **(Audited)** |    |
| **Assets**                                                                                                                                                                                                            |   |            |                  |          |    |
| **Current                  Assets**                                                                                                                                                                                   |   |            |                  |          |    |
| Cash                  and Cash Equivalents                                                                                                                                                                            |   | US$             |  2,732,810       |          | US$     |  4,340,211 |   |
| Accounts                  Receivable, Net of Provision                                                                                                                                                                |   |            | 35,854,111            |          |    | 30,586,239 |   |
| Notes                  Receivable                                                                                                                                                                                     |   |            | 10,434,941            |          |    | 9,410,385 |   |
| Inventory                                                                                                                                                                                                             |   |            | 11,083,242            |          |    | 8,220,373 |   |
| Prepayments                                                                                                                                                                                                           |   |            | 2,530,131             |          |    | 1,336,212 |   |
| Other                  current assets, including $0 and $1,761,007 from related parties                  at March                  31, 2008 and December 31, 2007, respectively.                                      |   |            | 2,056,025             |          |    | 4,275,294 |   |
| **Total                  Current Assets**                                                                                                                                                                             |   |            | 64,691,260            |          |    | 58,168,714 |   |
| **Fixed                  Assets**                                                                                                                                                                                     |   |            |                  |          |    |   |   |
| Property,                  Plant and Equipment                                                                                                                                                                        |   |            | 29,592,712            |          |    | 27,889,182 |   |
| Less:                  Accumulated Depreciation                                                                                                                                                                       |   |            | (6,927,803            | )             |    | (6,094,229 | ) |
| Property,                  Plant and Equipment, Net                                                                                                                                                                   |   |            | 22,664,909            |          |    | 21,794,953 |   |
|                                                                                                                                                                                                                  |   |            |                  |          |    |   |   |
| **Land                  Use Rights, Net**                                                                                                                                                                             |   |            | 14,374,566            |          |    | 13,889,705 |   |
|                                                                                                                                                                                                                  |   |            |                  |          |    |   |   |
| **Other                  Assets**                                                                                                                                                                                     |   |            |                  |          |    |   |   |
| Deferred                  compensation cost-stock options                                                                                                                                                             |   |            | 54,662                |          |    | 69,571 |   |
| Intangible                  Assets                                                                                                                                                                                    |   |            | 79,889                |          |    | 76,150 |   |
| Less:                  Accumulated Amortization                                                                                                                                                                       |   |            | (28,102               | )             |    | (25,116 | ) |
| Intangible                  Assets, Net                                                                                                                                                                               |   |            | 51,788                |          |    | 51,034 |   |
| Total                  Other Assets                                                                                                                                                                                   |   |            | 106,450               |          |    | 120,605 |   |
| **Total                  Assets**                                                                                                                                                                                     |   | **US$**         | **101,837,185**       |          | **US$** | ** 93,973,977** |   |
|                                                                                                                                                                                                                  |   |            |                  |          |    |   |   |
| **Liabilities                  and Shareholders' Equity**                                                                                                                                                             |   |            |                  |          |    |   |   |
| **Current                  Liabilities**                                                                                                                                                                              |   |            |                  |          |    |   |   |
| Accounts                  Payable and Notes Payable, including $3,120,968 and $97,503 due                  to related                  parties at March 31, 2008 and December 31, 2007,                  respectively |   | US$             |  7,417,133       |          | US$     |  5,305,172 |   |
| Deposit                  Received from Customers                                                                                                                                                                      |   |            | 2,657,046             |          |    | 2,079,946 |   |
| Short                  term bank loans                                                                                                                                                                                |   |            | 1,025,511             |          |    | 3,370,328 |   |
| Income                  tax payable                                                                                                                                                                                   |   |            | 513,673               |          |    | 373,769 |   |
| Accrued                  Expenses                                                                                                                                                                                     |   |            | 2,030,046             |          |    | 1,859,938 |   |
| Other                  Current Liabilities                                                                                                                                                                            |   |            | 387,490               |          |    | 463,563 |   |
| **Total                  Current Liabilities**                                                                                                                                                                        |   |            | 14,030,899            |          |    | 13,452,716 |   |
| **Minority                  Interest**                                                                                                                                                                                |   |            | 8,754,160             |          |    | 8,024,152 |   |
| **Shareholders'                  Equity**                                                                                                                                                                             |   |            |                  |          |    |   |   |
| Common                  Stock - $0.002 Par Value; 50,000,000 authorized,18,279,254                  issued and outstanding as ofMarch                  31, 2008 and December 31, 2007 respectively                    |   |            | 36,558                |          |    | 36,558 |   |
| Additional                  Paid In Capital                                                                                                                                                                           |   |            | 37,498,452            |          |    | 37,498,452 |   |
| Statutory                  Reserves                                                                                                                                                                                   |   |            | 2,237,597             |          |    | 1,882,979 |   |
| Accumulated                  other comprehensive income                                                                                                                                                               |   |            | 8,456,090             |          |    | 5,432,189 |   |
| Retained                  Earnings                                                                                                                                                                                    |   |            | 30,823,429            |          |    | 27,646,931 |   |
|                                                                                                                                                                                                                  |   |            | 79,052,126            |          |    | 72,497,109 |   |
| **Total                  Liabilities and Shareholders' Equity**                                                                                                                                                       |   | **US$**         | ** 101,837,185** |          | **US$** | ** 93,973,977** |   |

**The        accompanying notes are an integral part of these financial        statements**

----

**SORL        Auto Parts, Inc. and Subsidiaries**

**Consolidated        Statements of Income**

**For        The First Quarter Ended on March 31, 2008 and 2007**

|                                                                                                   |   | **Three Months Ended March 31,** |       |
|--------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|------------|
|                                                                                                   |   | **2008**                                             |       | **2007** |   |
|                                                                                                   |   |                                                 |       |   |   |
| Sales                                                                                                  |   | US$                                                  | 30,658,442 |   |   | 24,416,989 |   |
| include:                  sales to related parties                                                     |   |                                                 | 817,918    |   |   | 914,683 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Cost                  of Sales                                                                         |   |                                                 | 22,016,581 |   |   | 18,726,052 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Gross                  Profit                                                                          |   |                                                 | 8,641,861  |   |   | 5,690,937 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Expenses:                                                                                              |   |                                                 |       |   |   |   |   |
| Selling                  and Distribution Expenses                                                     |   |                                                 | 1,839,275  |   |   | 1,183,647 |   |
| General                  and Administrative Expenses                                                   |   |                                                 | 1,976,201  |   |   | 1,693,187 |   |
| Financial                  Expenses                                                                    |   |                                                 | 369,676    |   |   | 143,168 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Total                  Expenses                                                                        |   |                                                 | 4,185,152  |   |   | 3,020,002 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Operating                  Income                                                                      |   |                                                 | 4,456,709  |   |   | 2,670,935 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Other                  Income                                                                          |   |                                                 | 111,078    |   |   | 32,340 |   |
| Non-Operating                  Expenses                                                                |   |                                                 | (79,178    | ) |   | (4,089 | ) |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Income                  (Loss) Before Provision for Income Taxes                                       |   |                                                 | 4,488,609  |   |   | 2,699,186 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Provision                  for Income Taxes                                                            |   |                                                 | 563,474    |   |   | 362,465 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Net                  Income Before Minority Interest & Other Comprehensive                  Income |   | US$                                                  | 3,925,135  |   |   | 2,336,721 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Minority                  Interest                                                                     |   |                                                 | 394,019    |   |   | 235,189 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Net                  Income Attributable to Shareholders                                               |   |                                                 | 3,531,116  |   |   | 2,101,532 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Foreign                  Currency Translation Adjustment                                               |   |                                                 | 3,359,890  |   |   | 621,941 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Minority                  Interest's Share                                                             |   |                                                 | 335,989    |   |   | 62,194 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Comprehensive                  Income (Loss)                                                           |   |                                                 | 6,555,017  |   |   | 2,661,279 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Weighted                  average common share - Basic                                                 |   |                                                 | 18,279,254 |   |   | 18,275,126 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| Weighted                  average common share - Diluted                                               |   |                                                 | 18,290,126 |   |   | 18,333,009 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| EPS                  - Basic                                                                           |   |                                                 | 0.19       |   |   | 0.11 |   |
|                                                                                                   |   |                                                 |       |   |   |   |   |
| EPS                  - Diluted                                                                         |   |                                                 | 0.19       |   |   | 0.11 |   |

**The        accompanying notes are an integral part of these financial        statements**

----

**SORL        Auto Parts, Inc. and Subsidiaries**

**Consolidated        Statements of Cash Flows**

**For        The First Quarter Ended on March 31, 2008 and 2007**

|                                                                                                                    |   | **Three Months Ended March 31,** |           |
|-------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|----------------|
|                                                                                                                    |   | **2008**                                             |           | **2007** |   |
|                                                                                                                    |   |                                                 |           |   |   |
| **Cash                  Flows from Operating Activities**                                                               |   |                                                 |           |   |   |
| Net                  Income                                                                                             |   | US$                                                  | 3,531,116      |   |   | 2,101,532 |   |
| **Adjustments                  to reconcile net income (loss) to net cash from operating                  activities:** |   |                                                 |           |   |   |   |   |
| Minority                  Interest                                                                                      |   |                                                 | 394,019        |   |   | 235,189 |   |
| Bad                  Debt Expense                                                                                       |   |                                                 | 10,832         |   |   | 421,330 |   |
| Depreciation                  and Amortization                                                                          |   |                                                 | 654,555        |   |   | 340,297 |   |
| Stock-Based                  Compensation Expense                                                                       |   |                                                 | 14,909         |   |   | 14,909 |   |
| Loss                  on disposal of Fixed Assets                                                                       |   |                                                 | 0              |   |   | 1,108 |   |
| **Changes                  in Assets and Liabilities:**                                                                 |   |                                                 |           |   |   |   |   |
| Account                  Receivables                                                                                    |   |                                                 | (3,949,778     | ) |   | (2,534,364 | ) |
| Notes                  Receivables                                                                                      |   |                                                 | (628,857       | ) |   | (4,377,777 | ) |
| Other                  Currents Assets                                                                                  |   |                                                 | 2,347,575      |   |   | (231,094 | ) |
| Inventory                                                                                                               |   |                                                 | (2,477,972     | ) |   | (268,172 | ) |
| Prepayments                                                                                                             |   |                                                 | (1,116,827     | ) |   | 1,918,820 |   |
| Accounts                  Payable and Notes Payable                                                                     |   |                                                 | 1,858,290      |   |   | (1,069,002 | ) |
| Income                  Tax Payable                                                                                     |   |                                                 | 139,904        |   |   | 7,759 |   |
| Deposits                  Received from Customers                                                                       |   |                                                 | 482,648        |   |   | 286,432 |   |
| Other                  Current Liabilities and Accrued Expenses                                                         |   |                                                 | (17,038        | ) |   | (129,397 | ) |
|                                                                                                                    |   |                                                 |           |   |   |   |   |
| **Net                  Cash Flows from Operating Activities**                                                           |   |                                                 | **1,243,376**  |   |   | **(3,282,430** | **)** |
|                                                                                                                    |   |                                                 |           |   |   |   |   |
| **Cash                  Flows from Investing Activities**                                                               |   |                                                 |           |   |   |   |   |
| Acquisition                  of Property and Equipment                                                                  |   |                                                 | (557,391       | ) |   | (2,063,720 | ) |
| Investment                  in Intangible Assets                                                                        |   |                                                 | (628           | ) |   | (19,915 | ) |
|                                                                                                                    |   |                                                 |           |   |   |   |   |
| **Net                  Cash Flows from Investing Activities**                                                           |   |                                                 | **(558,019**   | **)** |   | **(2,083,635** | **)** |
|                                                                                                                    |   |                                                 |           |   |   |   |   |
| **Cash                  Flows from Financing Activities**                                                               |   |                                                 |           |   |   |   |   |
| Proceeds                  from (Repayment of) Bank Loans                                                                |   |                                                 | (2,432,466     | ) |   | — |   |
| Proceeds                  from Share Issuance                                                                           |   |                                                 |           |   |   |   |   |
| Capital                  contributed by Minority S/H                                                                    |   |                                            |      |   |    |    |   |
|                                                                                                                    |   |                                                 |           |   |   |   |   |
| **Net                  Cash flows from Financing Activities**                                                           |   |                                                 | **(2,432,466** | **)** |   | **—** |   |
|                                                                                                                    |   |                                                 |           |   |   |   |   |
| **Effects                  on changes in foreign exchange rate**                                                        |   |                                                 | 139,709        |   |   | 81,044 |   |
|                                                                                                                    |   |                                                 |           |   |   |   |   |
| Net                  Change in Cash and Cash Equivalents                                                                |   |                                                 | (1,607,401     | ) |   | (5,285,021 | ) |
|                                                                                                                    |   |                                                 |           |   |   |   |   |
| Cash                  and Cash Equivalents- Beginning of the year                                                       |   |                                                 | 4,340,211      |   |   | 11,137,501 |   |
|                                                                                                                    |   |                                                 |           |   |   |   |   |
| **Cash                  and cash Equivalents - End of the year**                                                        |   | **US$**                                              | **2,732,810**  |   |   | **5,852,480** |   |
|                                                                                                                    |   |                                                 |           |   |   |   |   |
| **Supplemental                  Cash Flow Disclosures:**                                                                |   |                                                 |           |   |   |   |   |
| Interest                  Paid                                                                                          |   |                                                 | 26,044         |   |   | 0 |   |
| Tax                  Paid                                                                                               |   |                                                 | 1,883,375      |   |   | 358,179 |   |

**The        accompanying notes are an integral part of these financial        statements**

----

**SORL        Auto Parts, Inc. and Subsidiaries**

**Consolidated        Statements of Changes in Shareholders' Equity**

**For        The First Quarter Ended on March 31, 2008 and 2007**

|                                                       |   | **Number****of Share** |           | **Common****Stock** |   | **Additional****Paid-in****Capital** |   | **Reserves **** ** |           | **Retained****Earnings****(Deficit)** |   | **Accumu.                    Other****Comprehensive****Income** |   | **Shareholders'****Equity** |           | **Minority****Interest** |   |
|------------------------------------------------------------|--------|-----------------------------|----------------|---------------------|--------|--------------------------------------|--------|------------------------------|----------------|---------------------------------------|--------|-----------------------------------------------------------------|--------|-----------------------------|----------------|--------------------------|--------|
| **Beginning                    Balance - January 1, 2007** |   |                        | **18,275,126** |                |   | **36,550**                           |   |                         | **37,444,051** |                                  |   | **797,116**                                                     |   |                        | **17,988,763** |                     |   | **1,102,469** |   |   | **57,368,949** |   |   | **6,336,557** |   |
|                                                       |   |                        |           |                |   |                                 |   |                         |           |                                  |   |                                                            |   |                        |           |                     |   |   |   |   |   |   |   |   |   |
| Net                    Income                              |   |                        | —        |                |   | —                              |   |                         | —        |                                  |   | —                                                         |   |                        | 2,101,532      |                     |   | — |   |   | 2,101,532 |   |   | 235,189 |   |
|                                                       |   |                        |           |                |   |                                 |   |                         |           |                                  |   |                                                            |   |                        |           |                     |   |   |   |   |   |   |   |   |   |
| Other                    Comprehensive Income(Loss)        |   |                        | —        |                |   | —                              |   |                         | —        |                                  |   | —                                                         |   |                        | —        |                     |   | 559,747 |   |   | 559,747 |   |   | 62,194 |   |
|                                                       |   |                        |           |                |   |                                 |   |                         |           |                                  |   |                                                            |   |                        |           |                     |   |   |   |   |   |   |   |   |   |
| Transfer                    to reserve                     |   |                        | —        |                |   | —                              |   |                         | —        |                                  |   | 211,670                                                         |   |                        | -211,670       |                     |   | — |   |   | — |   |   | — |   |
|                                                       |   |                        |           |                |   |                                 |   |                         |           |                                  |   |                                                            |   |                        |           |                     |   |   |   |   |   |   |   |   |   |
| ***Ending                    Balance - March 31, 2007***   |   |                        | **18,275,126** |                |   | **36,550**                           |   |                         | **37,444,051** |                                  |   | **1,008,786**                                                   |   |                        | **19,878,625** |                     |   | **1,662,216** |   |   | **60,030,228** |   |   | **6,633,940** |   |
|                                                       |   |                        |           |                |   |                                 |   |                         |           |                                  |   |                                                            |   |                        |           |                     |   |   |   |   |   |   |   |   |   |
| **Beginning                    Balance - January 1, 2008** |   |                        | **18,279,254** |                |   | **36,558**                           |   |                         | **37,498,452** |                                  |   | **1,882,979**                                                   |   |                        | **27,646,931** |                     |   | **5,432,189** |   |   | **72,497,109** |   |   | **8,024,152** |   |
|                                                       |   |                        |           |                |   |                                 |   |                         |           |                                  |   |                                                            |   |                        |           |                     |   |   |   |   |   |   |   |   |   |
| Net                    Income                              |   |                        | —        |                |   | —                              |   |                         | —        |                                  |   | —                                                         |   |                        | 3,531,116      |                     |   | — |   |   | 3,531,116 |   |   | 394,019 |   |
|                                                       |   |                        |           |                |   |                                 |   |                         |           |                                  |   |                                                            |   |                        |           |                     |   |   |   |   |   |   |   |   |   |
| Other                    Comprehensive Income(Loss)        |   |                        | —        |                |   | —                              |   |                         | —        |                                  |   | —                                                         |   |                        | —        |                     |   | 3,023,901 |   |   | 3,023,901 |   |   | 335,989 |   |
|                                                       |   |                        |           |                |   |                                 |   |                         |           |                                  |   |                                                            |   |                        |           |                     |   |   |   |   |   |   |   |   |   |
| Transfer                    to reserve                     |   |                        | —        |                |   | —                              |   |                         | —        |                                  |   | 354,618                                                         |   |                        | -354,618       |                     |   | — |   |   | — |   |   | — |   |
|                                                       |   |                        |           |                |   |                                 |   |                         |           |                                  |   |                                                            |   |                        |           |                     |   |   |   |   |   |   |   |   |   |
| ***Ending                    Balance - March 31, 2008***   |   |                        | **18,279,254** |                |   | **36,558**                           |   |                         | **37,498,452** |                                  |   | **2,237,597**                                                   |   |                        | **30,823,429** |                     |   | **8,456,090** |   |   | **79,052,126** |   |   | **8,754,160** |   |

**The        accompanying notes are an integral part of these financial        statements**

----

**NOTES        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS **

**NOTE        A - DESCRIPTION OF BUSINESS **

**NOTE        B - BASIS OF PRESENTATION **

**NOTE        C- RECENTLY ISSUED FINANCIAL STANDARDS **

----

----

**NOTE        D - RELATED PARTY TRANSACTIONS **

|                                   |   | **Three Months Ended March 31,** |      |
|----------------------------------------|--------|------------------------------------------------------|-----------|
|                                   |   | **2008**                                             |      | **2007** |   |
|                                   |   |                                                 |      |   |   |
| PURCHASES                  FROM:       |   |                                                 |      |   |   |
| Ruili                  Group Co., Ltd. |   | $                                                    | 8,504,144 |   | $ | 5,378,595 |   |
| Total                                  |   | $                                                    | 8,504,144 |   | $ | 5,378,595 |   |
|                                   |   |                                                 |      |   |   |   |   |
| SALES                  TO:             |   |                                                 |      |   |   |   |   |
| Ruili                  Group Co., Ltd. |   | $                                                    | 817,918   |   | $ | 914,683 |   |
| Total                                  |   | $                                                    | 817,918   |   | $ | 914,683 |   |

|                                       |   | **March 31,** |      | **December 31,** |   |
|--------------------------------------------|--------|--------------------|-----------|-----------------------|--------|
|                                       |   | **2008**           |      | **2007**              |   |
| ACCOUNTS                  PAYABLE          |   |               |      |                  |   |
| Ruili                  Group Co., Ltd.     |   | $                  | 3,210,968 |                  | $      | 97,503 |   |
| Total                                      |   | $                  | 3,210,968 |                  | $      | 97,503 |   |
|                                       |   |               |      |                  |   |   |   |
| OTHER                  ACCOUNTS RECEIVABLE |   |               |      |                  |   |   |   |
| Ruili                  Group Co., Ltd.     |   | $                  | —   |                  | $      | 1,761,007 |   |
| Total                                      |   | $                  | —   |                  | $      | 1,761,007 |   |

**NOTE        E - ACCOUNTS RECEIVABLE**

|                                          |   | **March 31,** |   | **December 31,** |   |
|-----------------------------------------------|--------|--------------------|--------|-----------------------|--------|
|                                          |   | **2008**           |   | **2007**              |   |
| Beginning                    balance          |   | $                  | 27,987 |                  | $      | 8,769 |   |
| Add:                    Increase to allowance |   |               | 7,942  |                  |   | 19,218 |   |
| Less:                    Accounts written off |   |               |   |                  |   |   |   |
| Ending                    balance             |   | $                  | 35,929 |                  | $      | 27,987 |   |

----

|                                                   |   | **March 31,** |       | **December 31,** |   |
|--------------------------------------------------------|--------|--------------------|------------|-----------------------|--------|
|                                                   |   | **2008**           |       | **2007**              |   |
| Accounts                  receivable                   |   | $                  | 35,890,040 |                  | $      | 30,614,226 |   |
| Less:                  allowance for doubtful accounts |   |               | (35,929    | )                     |   | (27,987 | ) |
| Account                  receivable balance, net       |   | $                  | 35,854,111 |                  | $      | 30,586,239 |   |

**NOTE        F - INVENTORIES**

|                             |   | **March 31,** |       | **December 31,** |   |
|----------------------------------|--------|--------------------|------------|-----------------------|--------|
|                             |   | **2008**           |       | **2007**              |   |
| Raw                  Material    |   | $                  | 3,463,876  |                  | $      | 2,354,637 |   |
| Work                  in process |   |               | 703,938    |                  |   | 4,157,643 |   |
| Finished                  Goods  |   |               | 6,915,428  |                  |   | 1,708,093 |   |
| Total                  Inventory |   | $                  | 11,083,242 |                  | $      | 8,220,373 |   |

**NOTE        G - PROPERTY, PLANT AND EQUIPMENT**

|                                            |   | **March 31,** |       | **December 31,** |   |
|-------------------------------------------------|--------|--------------------|------------|-----------------------|--------|
|                                            |   | **2008**           |       | **2007**              |   |
| Machinery                                       |   | $                  | 19,243,244 |                  | $      | 18,118,125 |   |
| Molds                                           |   |               | 1,242,050  |                  |   | 1,193,488 |   |
| Office                  equipment               |   |               | 427,507    |                  |   | 358,163 |   |
| Vehicle                                         |   |               | 914,185    |                  |   | 757,311 |   |
| Building                                        |   |               | 7,765,726  |                  |   | 7,462,096 |   |
| Construction                  In Progress       |   |               |       |                  |   |   |   |
| Sub-Total                                       |   |               | 29,592,712 |                  |   | 27,889,182 |   |
|                                            |   |               |       |                  |   |   |   |
| Less:                  Accumulated depreciation |   |               | (6,927,803 | )                     |   | (6,094,229 | ) |
|                                            |   |               |       |                  |   |   |   |
| Fixed                  Assets, net              |   | $                  | 22,664,909 |                  | $      | 21,794,953 |   |

----

**NOTE      **
**H-      LAND USE RIGHTS**

|                                           |   | **March                31,** |                       |                  **December 31,** |   |
|------------------------------------------------|--------|------------------------------|----------------------------|---------------------------------------------|--------|
|                                           |   | **2008**                     |                            | **2007**                                    |   |
| Cost:                                          |   | $                            | 14,535,176                 |                                        | $      | 13,966,870 |   |
| Less:                Accumulated amortization: |   |                         |   (160,610   | )                                           |   | (77,165 | ) |
| Land                use rights, net            |   | $                            |  14,374,566  |                                        | $      | 13,889,705 |   |

**NOTE      I - INTANGIBLE ASSETS**

| **2008** |       |   | **2009** |   |   | **2010** |   |   | **2011** |   |   | **2012** |   |   | **Thereafter** |   |
|----------|-------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------------|--------|
| $        | 5,058 |   | $        | 7,163  |   | $        | 7,163  |   | $        | 7,163  |   | $        | 7,163  |   | $              | 18,078 |   |

**NOTE      J - PREPAYMENT**

|                                  |   | **March 31,** |                                            | **December 31,** |   |
|---------------------------------------|--------|--------------------|-------------------------------------------------|-----------------------|--------|
|                                  |   | **2008**           |                                            | **2007**              |   |
| Raw                material suppliers |   | $                  | 2,030,563                                       |                  | $      | 929,178 |   |
| Equipment                purchase     |   |               |   499,568                  |                  |   |  407,035 |   |
| Total                prepayment       |   | $                  |  2,530,131                        |                  | $      | 1,336,212 |   |

**NOTE      **
**K      - BANK LOANS**

|                                 |   | **March                31,** |                    | **December 31,** |   |
|--------------------------------------|--------|------------------------------|-------------------------|-----------------------|--------|
|                                 |   | **2008**                     |                    | **2007**              |   |
| Secured                              |   | $                            | 1,025,511               |                  | $      | 3,370,328 |   |
| Less:                Current portion |   | $                            |  (1,025,511      | )                     | $      | (3,370,328 | ) |
| Non-current                portion   |   | $                            |  —  |                  | $      | —  |   |

----

**NOTE      L - ACCRUED EXPENSES**

|                                  |   | **March                31,** |                                              | **December 31,** |   |
|---------------------------------------|--------|------------------------------|---------------------------------------------------|-----------------------|--------|
|                                  |   | **2008**                     |                                              | **2007**              |   |
| Accrued                payroll        |   | $                            | 716,669                                           |                  | $      | 601,733 |   |
| Other                accrued expenses |   |                         |   1,313,377                  |                  |   |  1,258,205 |   |
| Total                accrued expenses |   | $                            |  2,030,046                          |                  | $      | 1,859,938 |   |

**NOTE      **
**M      - RESERVE**

|                                                                        |   | **March                31,** |              | **December 31,** |   |
|-----------------------------------------------------------------------------|--------|------------------------------|-------------------|-----------------------|--------|
|                                                                        |   | **2008**                     |              | **2007**              |   |
| Statutory                surplus reserve fund      |   | $                            |  2,237,597 |                  | $      | 1,882,979 |   |
| Total                                                                       |   | $                            |  2,237,597 |                  | $      | 1,882,979 |   |

----

**NOTE      N - INCOME TAXES**

| Statutory                tax rate               |   |   | 25.0  | %      |
|-------------------------------------------------|--------|--------|-------|--------|
| Tax                Tax holidays and concessions |   |   | -12.5 | %      |
|                                            |   |   |       |   |
| EffeEffective                tax rate           |   |   | 12.5  | %      |

**NOTE      O - LEASES**

|      |   | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **2012** | ** ** | **Thereafter** |   |
|-----------|--------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|--------|
| Buildings |   | $        | 195,996    |     | $          | 263,076  |       | $        | 263,076    |     | $          | 263,076        |   | $ | 63,830 |   | $ | — |   |
| Total     |   | $        | 195,996    |     | $          | 263,076  |       | $        | 263,076    |     | $          | 263,076        |   | $ | 63,830 |   | $ | — |   |

**NOTE      P - ADVERTISING COSTS **

**NOTE      Q - RESEARCH AND DEVELOPMENT EXPENSE **

----

**NOTE      R - WARRANTY CLAIMS**

| Beginning                balance at Jan 01, 2008                                |   | $ | 863,428 |   |
|---------------------------------------------------------------------------------|--------|---|---------|--------|
| Accrued                during the first quarter ended March 31, 2008:           |   | $ | 447,359 |   |
| Less:                Actual Paid during the first quarter ended March 31, 2008: |   | $ | 464,259 |   |
| Ending                balance at March 31, 2008                                 |   | $ | 846,528 |   |

**NOTE      S - STOCK COMPENSATION PLAN **

| **Number                of Shares** |   | **% of Shares****Issued** |   | **Initial Vesting****Date** |   |
|-------------------------------------|--------|-------------------------------------|--------|----------------------------------|--------|
|                                |   |                                |   |                             |   |
| 60,000                              |   |                                | 100    | %                                |   | March 1, 2009 |   |

| Dividend                Yield               |   |   | 0.00         | %      |
|---------------------------------------------|--------|--------|--------------|--------|
| Expected                Volatility          |   |   | 96.54        | %      |
| Risk-Free                Interest Rate      |   |   | 4.59         | %      |
| Contractual                Term             |   |   | 3 years |   |
| Stock                Price at Date of Grant |   | $      | 4.79         |   |
| Exercise                Price               |   | $      | 4.79         |   |

----

|                                              |   | **Options** |    | **Weighted****Average****Exercise****Price** |   | **Weighted****Average****Remaining****Contractual****Term** |   | **Aggregate****Intrinsic****Value** |     |
|---------------------------------------------------|--------|-------------|---------|----------------------------------------------|--------|-------------------------------------------------------------|--------|-------------------------------------|----------|
|                                              |   |        |    |                                         |   |                                                        |   |                                |     |
| January                1, 2006                    |   |        | — |                                         | $      | —                                                     |   |                                | —  |   | $ | — |   |
| Granted                                           |   |        | 60,000  |                                         |   | 4.79                                                        |   |                                | 3Years   |   |   | — |   |
| Exercised                                         |   |        | — |                                         |   | —                                                     |   |                                | —  |   |   | — |   |
| Forfeited                                         |   |        | — |                                         |   | —                                                     |   |                                | —  |   |   | — |   |
|                                              |   |        |         |                                         |   |                                                             |   |                                |     |   |   |  |   |
| Outstanding                at March 31, 2008 |   |        | 60,000  |                                         | $      | 4.79                                                        |   |                                | 0.9Years |   | $ | 16,800 |   |
|                                              |   |        |         |                                         |   |                                                             |   |                                |          |   |   |  |   |
| Exercisable                at March 31, 2008 |   |        | — |                                         |   | —                                                     |   |                                | —  |   |   | — |   |

| **Number                of Shares** |   | **% of Shares                Issued** |   | **Initial Vesting                Date** |   |
|-------------------------------------|--------|-------------------------------------------------|--------|----------------------------------------------|--------|
|                                |   |                                            |   |                                         |   |
| 4,128                               |   |                                            | 100    | %                                            |   | June 20, 2007 |   |

| Dividend                Yield               |   |   | 0.00                   | %      |
|---------------------------------------------|--------|--------|------------------------|--------|
| Expected                Volatility          |   |   | 141.47                 | %      |
| Risk-Free                Interest Rate      |   |   | 5.14                   | %      |
| Contractual                Term             |   |   | 3                years |   |
| Stock                Price at Date of Grant |   | $      | 7.09                   |   |
| Exercise                Price               |   | $      | 7.25                   |   |

----

|                                              |   | **Options** |    | **Weighted****Average****Exercise****Price** |   | **Weighted****Average****Remaining****Contractual****Term** |   | **Aggregate****Intrinsic****Value** |     |
|---------------------------------------------------|--------|-------------|---------|----------------------------------------------|--------|-------------------------------------------------------------|--------|-------------------------------------|----------|
|                                              |   |        |    |                                         |   |                                                        |   |                                |     |
| January                1, 2007                    |   |        | — |                                         | $      | —                                                     |   |                                | —  |   | $ | — |   |
| Granted                                           |   |        | 4,128   |                                         | $      | 7.25                                                        |   |                                | 3Years   |   |   | — |   |
| Exercised                                         |   |        | — |                                         |   | —                                                     |   |                                | —  |   |   | — |   |
| Forfeited                                         |   |        | — |                                         |   | —                                                     |   |                                | —  |   |   | — |   |
|                                              |   |        |         |                                         |   |                                                             |   |                                |          |   |   |  |   |
| Outstanding                at March 31, 2008 |   |        | 4,128   |                                         | $      | 7.25                                                        |   |                                | 2.3Years |   | $ | — |   |
|                                              |   |        |    |                                         |   |                                                             |   |                                |          |   |   |  |   |
| Exercisable                at March 31, 2008 |   |        | 4,128   |                                         | $      | 7.25                                                        |   |                                | 2.3Years |   | $ | — |   |

| **Number                of Shares** |   | **% of Shares****Issued** |   | **Initial Vesting****Date** |   |
|-------------------------------------|--------|-------------------------------------|--------|----------------------------------|--------|
|                                |   |                                |   |                             |   |
| 100,000                             |   |                                | 100    | %                                |   | January                5, 2006 |   |

|                                        |   |                    |                   |
|---------------------------------------------|--------|------------------------------|------------------------|
| Dividend                Yield               |   |                         | 0.00                   | % |
| Expected                Volatility          |   |                         | 95.01                  | % |
| Risk-Free                Interest Rate      |   |                         | 4.36                   | % |
| Contractual                Term             |   |                         | 4                years |   |
| Stock                Price at Date of Grant |   | $                            | 4.70                   |   |
| Exercise                Price               |   | $                            | 6.25                   |   |

----

|                                              |   | **Warrants** |    | **Weighted****Average****Exercise****Price** |   | **Weighted****Average****Remaining****Contractual****Term** |   | **Aggregate****Intrinsic****Value** |     |
|---------------------------------------------------|--------|--------------|---------|----------------------------------------------|--------|-------------------------------------------------------------|--------|-------------------------------------|----------|
|                                              |   |         |    |                                         |   |                                                        |   |                                |     |
| January                1, 2006                    |   |         | — |                                         | $      | —                                                     |   |                                | —  |   | $ | — |   |
| Granted                                           |   |         | 100,000 |                                         | $      | 6.25                                                        |   |                                | 4Years   |   |   | — |   |
| Exercised                                         |   |         | — |                                         |   | —                                                     |   |                                | —  |   |   | — |   |
| Forfeited                                         |   |         | — |                                         |   | —                                                     |   |                                | —  |   |   | — |   |
|                                              |   |         |    |                                         |   |                                                             |   |                                |          |   |   |  |   |
| Outstanding                at March 31, 2008 |   |         | 100,000 |                                         | $      | 6.25                                                        |   |                                | 1.8Years |   | $ | — |   |
|                                              |   |         |    |                                         |   |                                                             |   |                                |          |   |   |  |   |
| Exercisable                at March 31, 2008 |   |         | 100,000 |                                         | $      | 6.25                                                        |   |                                | 1.8Years |   | $ | — |   |

**NOTE      T- COMMITMENTS AND CONTINGENCIES**

| Information                on lease commitments is provided in Note O. |
|------------------------------------------------------------------------|

**NOTE      U - OFF-BALANCE SHEET ARRANGEMENTS **

**ITEM      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS **

----

**OVERVIEW      **

The      Company manufactures and distributes automotive air brake valves and related      components in China and internationally for use primarily in vehicles weighing      over three tons, such as trucks and buses. There are forty categories of valves      with over one thousand different specifications. Management believes that it      is      the largest manufacturer of automotive brake valves in China. 

**CRITICAL      ACCOUNTING POLICIES AND ESTIMATES **

**Results      of Operations **

***Results      of operations for the three months ended March 31, 2008 as compared to the      three      months ended March 31, 2007.***

**SALES      **

|                                                     |   | **Three                Months ended** |   | **three                Months ended** |   |
|----------------------------------------------------------|--------|---------------------------------------|--------|---------------------------------------|--------|
|                                                     |   | **31-MAR-08**                         |   | **31-MAR-07**                         |   |
| Air                brake valves & related components |   | $                                     | 24.1   |                                  |   | M |   |   | 78.5 | % |   |   |   | $ | 19.1 |   |   | M |   |   | 78.3 | % |
| Non-valve                products                        |   | $                                     | 6.6    |                                  |   | M |   |   |  21.5 | % |   |   |   | $ | 5.3 |   |   | M |   |   |  21.7 | % |
| Total                                                    |   | $                                     | 30.7   |                                  |   | M |   |   | 100 | % |   |   |   | $ | 24.4 |   |   | M |   |   | 100 | % |

----

|                                |   | **Three****Months**                          |   | **Percent**                    |   | **Three****Months** |   | **Percent**                    |   |           |   |
|-------------------------------------|--------|----------------------------------------------|--------|--------------------------------|--------|---------------------|--------|--------------------------------|--------|----------------|--------|
|                                |   | **ended**                                    |   | **of**                         |   | **ended**           |   | **of**                         |   | **Percentage** |   |
|                                |   | **31-Mar-08**                                |   | **Total                Sales** |   | **31-Mar-07**       |   | **Total                Sales** |   | **Change**     |   |
|                                |   | **(U.S.                dollars in million)** |   |                           |   |
| China                OEM market     |   | $                                            | 10.7   |                           |   | 35                  | %      |                           |   |           | $      | 8.9 |   |   | 36 | % |   | 20.2 | % |
| China                Aftermarket    |   | $                                            | 9.9    |                           |   | 32                  | %      |                           |   |           | $      | 7.1 |   |   | 29 | % |   | 39.4 | % |
| International                market |   | $                                            | 10.1   |                           |   | 33                  | %      |                           |   |           | $      | 8.4 |   |   |  35 | % |   | 20.2 | % |
| Total                               |   | $                                            | 30.7   |                           |   | 100                 | %      |                           |   |           | $      | 24.4 |   |   | 100 |   |   | 25.6 | % |

**COST      OF SALES**

**GROSS      PROFIT **

----

**SELLING      AND DISTRIBUTION EXPENSES **

|   | (1) | Increased                transportation expense: During the first quarter of 2008, transportation                costs increased by $263,910 as compared to $248,998 for the same                period of                2007. The increase in transportation expense was mainly due to increased                sales and the rise in the transportation cost resulted from the increase                price of oil since the third quarter of 2007. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Increased                packaging expense: Packaging costs were $573,102for the three months                ended                March 31, 2008, an increase of $135,292 as compared with the same                period                of 2007, which was consistent with the revenue growth. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Increased                product warranty expense. The Company recorded $447,359 of product                warranty expenses for the three months ended March 31, 2008, as compared                to $                264,803                for the three months ended March 30, 2007, an increase of $182,556. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**GENERAL      AND ADMINISTRATIVE EXPENSES**

|  | (1) | Increase                sales necessitated increased depreciation, office expenses, staff                salary,                work insurance and welfare, travel expenses and other miscellaneous                fees                totaling $539,769, an increase of $202,955as compared to the same                period                of 2007. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | R&D                expense, which is included in general and administrative expenses,                increased by $ 246,423, as compared to$222,875of R&D expense for the                same period of 2007, as discussed below. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (3) | These                increases were substantially offset by a $503,179 reduction in the                allowance for bad debts, entertainment expense, rent expense, and                professional fees. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**RESEARCH      AND DEVELOPMENT EXPENSE **

**DEPRECIATION      AND AMORTIZATION **

**FINANCIAL      EXPENSE **

**OTHER      INCOME **

**INCOME      TAX **

----

**STOCK-BASED      COMPENSATION **

**MINORITY      INTEREST **

**FINANCIAL      CONDITION **

**Liquidity      and Capital Resources **

** **

----

**OFF-BALANCE      SHEET AGREEMENTS **

**ITEM      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

----

**ITEM      4. CONTROLS AND PROCEDURES **

**Management’s      Report on Internal Control over Financial Reporting**

*Internal      Control-Integrated Framework *
*Internal      Control-Integrated Framework*

**Changes      in Internal Control over Financial Reporting**

----

**PART      II OTHER INFORMATION **

**ITEM      6. EXHIBITS**

| (a)    | Exhibits: |
|--------|-----------|
|   |      |   |
|   | 31.1      | Certification                of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),                promulgated under the Securities and Exchange Act of 1934, as                amended. |
|   |      |   |
|   | 31.2      | Certification                of Principal Accounting Officer pursuant to Rule 13a-14 and Rule                15d-14(a)                promulgated under the Securities and Exchange Act of 1934, as                amended. |
|   |      |   |
|   | 32.1      | Certification                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002. |

----

| Dated                : May 13, 2008 | SORL                AUTO PARTS, INC.                                        |
|-------------------------------------|-----------------------------------------------------------------------------|
|                                |                                                                        |
|                                | By:                /s/ Xiao Ping Zhang                                      |
|                                | Name:                Xiao Ping Zhang                                        |
|                                | Title:                Chief Executive Officer                               |
|                                |                                                                        |
|                                | By:                /s/ Zong Yun Zhou                                        |
|                                | Name:                Zong Yun Zhou                                          |
|                                | Title:                Chief Financial Officer (Principal Financial Officer) |

----