**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





______________





**Form
      10-Q**




(Mark
      one)





x
            Quarterly
                Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934For
                the quarterly period ended June 30,
                2005





OR





 ̈
            Transition
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934For
                the transition period from _______________ to
                ________________





______________





**Commission
      File Number**  **333-114547**





______________





**ADVANCED
      ACCESSORY HOLDINGS CORPORATION**


*(Exact
      name of registrant as specified in its charter)*





**Delaware**
            **56-2426615***(State
                or other jurisdiction of*
            *(I.R.S.
                Employer**incorporation
                or organization)*
            *Identification
                No.)*





**12900
                Hall Road, Suite 200, Sterling Heights, MI**
            **48313***(Address
                of principal executive offices)*
            *(Zip
                Code)*





**(586)
      997-2900**


*(Registrant’s
      telephone number, including area code)*





**NOT
      APPLICABLE**


*(Former
      name, former address and former fiscal year, if changed since last
      report)*





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such a period that the registrant was required
      to
      file such reports), and (2) has been subject to such filing requirements for
      the
      past 90 days.







Yes
            x
            No
             ̈


Indicate
      by check mark whether the Registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Exchange Act).





Yes
             ̈
            No
            x


Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date.






Class
            
            Outstanding
                at August 15, 2005Membership
                Units
            
            100










**ADVANCED
            ACCESSORY HOLDINGS CORPORATION**
 
 **INDEX**








Page
                No.Part
                I.Financial
                InformationItem
                1.Financial
                StatementsConsolidated
                Condensed Balance Sheets as of June 30,
                2005
            1and
                December 31, 2004Consolidated
                Condensed Statements of Operations for the
                three months and six months
            2ended
                June 30, 2005 and 2004Consolidated
                Condensed Statements of Cash Flows for the
                six months
            3ended
                June 30, 2005 and 2004Consolidated
                Condensed Statement of Changes in Members’
                Equity for the six months
            4ended
                June 30, 2005Notes
                to Consolidated Condensed Financial
                Statements
            5Item
                2.Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            7Item
                3.Quantitative
                and Qualitative Disclosures About Market Risk
            13Item
                4.Controls
                and Procedures
            13Part
                II.Other
                Information and SignatureItem
                1.Legal
                Proceedings
            13Item
                2.Changes
                in Securities, Use of Proceeds and Issuer Purchases of Equity
                Securities
            13Item
                3.Defaults
                Upon Senior Securities
            13Item
                4.Submission
                of Matters to a Vote of Security-Holders
            13Item
                5.Other
                Information
            13Item
                6.Exhibits
            14Signature
            15








**PART
            I. FINANCIAL INFORMATION**
 **Item
            1. Financial Statements**
 **ADVANCED
            ACCESSORY HOLDINGS CORPORATION**
 **CONSOLIDATED
            CONDENSED BALANCE SHEETS**
 **As
            of June 30, 2005 and December 31, 2004**
 **(Dollars
            in thousands)**






**June
                30,**
            
            **December
                31,****2005**
            
            **2004****ASSETS**
            
            **(Unaudited)**Current
                assetsCash
            
            $
            5,926
            
            $
            14,960Accounts
                receivable, less reservesof
                $1,918 and $2,078, respectively
            
            
            82,479
            
            
            61,745InventoriesRaw
                materials
            
            
            24,636
            
            
            25,400Work-in-process
            
            
            11,418
            
            
            12,382Finished
                goods
            
            
            26,613
            
            
            28,937Reserves
            
            
            (4,896
            )
            
            (5,325
            )Total
                inventories
            
            
            57,771
            
            
            61,394Other
                current assets
            
            
            13,636
            
            
            13,976Total
                current assets
            
            
            159,812
            
            
            152,075Property
                and equipment, net
            
            
            69,612
            
            
            75,113Goodwill
            
            
            39,061
            
            
            39,061Other
                intangible assets, net
            
            
            98,305
            
            
            105,022Deferred
                income taxes
            
            
            1,225
            
            
            1,047Other
                noncurrent assets
            
            
            1,579
            
            
            2,194Total
                Assets
            
            $
            369,594
            
            $
            374,512**LIABILITIES
                AND MEMBERS’ EQUITY**Current
                liabilitiesCurrent
                maturities of long-term debt
            
            $
            3,386
            
            $
            3,068Accounts
                payable
            
            
            48,435
            
            
            46,664Accrued
                liabilities
            
            
            24,274
            
            
            22,551Deferred
                income taxes
            
            
            1,677
            
            
            1,876Total
                current liabilities
            
            
            77,772
            
            
            74,159Noncurrent
                liabilitiesDeferred
                income taxes
            
            
            6,302
            
            
            7,203Other
                noncurrent liabilities
            
            
            3,923
            
            
            4,276Long-term
                debt, less current maturities
            
            
            259,939
            
            
            253,466Total
                noncurrent liabilities
            
            
            270,164
            
            
            264,945Members’
                equityUnits
            
            
            58,582
            
            
            58,582Other
                comprehensive income
            
            
            (939
            )
            
            2,859Accumulated
                deficit
            
            
            (35,985
            )
            
            (26,033
            )Total
                Members’ Equity
            
            
            21,658
            
            
            35,408Total
                Liabilities and Members’ Equity
            
            $
            369,594
            
            $
            374,512











The
            accompanying notes are an integral part of the
 consolidated
            condensed financial statements.
 
 1
 
 **ADVANCED
            ACCESSORY HOLDINGS CORPORATION**
 **CONSOLIDATED
            CONDENSED STATEMENTS OF OPERATIONS**
 **(Dollars
            in thousands)**
 **(Unaudited)**











**Three
                Months Ended**
            
            **Six
                Months Ended****June
                30,**
            
            **June
                30,****2005**
            
            **2004**
            
            **2005**
            
            **2004**Net
                sales
            
            $
            128,422
            
            $
            108,346
            
            $
            239,692
            
            $
            204,977Cost
                of sales
            
            
            101,899
            
            
            83,329
            
            
            193,393
            
            
            157,393Gross
                profit
            
            
            26,523
            
            
            25,017
            
            
            46,299
            
            
            47,584Selling,
                administrative and product development expenses
            
            
            16,560
            
            
            15,629
            
            
            33,145
            
            
            30,714Amortization
                of intangible assets
            
            
            2,056
            
            
            2,113
            
            
            4,122
            
            
            4,164Operating
                income
            
            
            7,907
            
            
            7,275
            
            
            9,032
            
            
            12,706Other
                expenseInterest
                expense
            
            
            (7,058
            )
            
            (7,054
            )
            
            (14,535
            )
            
            (13,188
            )Foreign
                currency loss, net
            
            
            (2,197
            )
            
            (424
            )
            
            (3,528
            )
            
            (1,052
            )Other
                income
            
            
            82
            
            
            199
            
            
            72
            
            
            110Loss
                before income taxes
            
            
            (1,266
            )
            
            (4
            )
            
            (8,959
            )
            
            (1,424
            )Provision
                for (benefit from) income taxes
            
            
            1,017
            
            
            38
            
            
            993
            
            
            (427
            )Net
                loss
            
            $
            (2,283
            )
            $
            (42
            )
            $
            (9,952
            )
            $
            (997
            )











The
            accompanying notes are an integral part of the
 consolidated
            condensed financial statements.
 
 2
 
 **ADVANCED
            ACCESSORY HOLDINGS CORPORATION**
 **CONSOLIDATED
            CONDENSED STATEMENTS OF CASH FLOWS**
 **(Dollars
            in thousands)**
 **(Unaudited)**







**Six
                Months Ended****June
                30,****2005**
            
            **2004****CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            $
            (9,952
            )
            $
            (997
            )Adjustments
                to reconcile net loss to netcash
                provided by (used for) operating activities:Depreciation
                and amortization
            
            
            12,770
            
            
            10,810Deferred
                taxes
            
            
            (671
            )
            
            (4,502
            )Foreign
                currency loss
            
            
            3,478
            
            
            166Loss
                on disposal of assets
            
            
            8
            
            
            123Interest
                accretion on notes
            
            
            4,120
            
            
            3,376Changes
                in assets and liabilities, net:Accounts
                receivable
            
            
            (23,718
            )
            
            (20,386
            )Inventories
            
            
            5
            
            
            (3,597
            )Other
                current assets
            
            
            (3,341
            )
            
            (1,070
            )Other
                noncurrent assets
            
            
            4,166
            
            
            (255
            )Accounts
                payable
            
            
            3,876
            
            
            12,263Accrued
                liabilities
            
            
            3,288
            
            
            5,268Other
                noncurrent liabilities
            
            
            (573
            )
            
            (41
            )Net
                cash provided by (used for) operating activities
            
            
            (6,544
            )
            
            1,158**CASH
                FLOWS USED FOR INVESTING ACTIVITIES:**Acquisition
                of CHAAS Acquisitions, net of cash acquired
            
            
            —
            
            
            (84,396
            )Acquisition
                of property and equipment
            
            
            (6,766
            )
            
            (6,076
            )Net
                cash used for investing activities
            
            
            (6,766
            )
            
            (90,472
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                from issuance of debt
            
            
            —
            
            
            50,273Debt
                issuance costs
            
            
            (92
            )
            
            (2,462
            )Net
                increase (decrease) in revolving loan
            
            
            6,182
            
            
            (769
            )Repayment
                of debt
            
            
            (1,045
            )
            
            (5,835
            )Issuance
                of membership units
            
            
            —
            
            
            101,082Distributions
                to members
            
            
            —
            
            
            (42,500
            )Net
                cash provided by financing activities
            
            
            5,045
            
            
            99,789Effect
                of exchange rate changes
            
            
            (769
            )
            
            475Net
                increase (decrease) in cash
            
            
            (9,034
            )
            
            10,950Cash
                at beginning of period
            
            
            14,960
            
            
            —Cash
                at end of period
            
            $
            5,926
            
            $
            10,950




















The
            accompanying notes are an integral part of the
 consolidated
            condensed financial statements.
 
 3
 
 **ADVANCED
            ACCESSORY HOLDINGS CORPORATION**
 **CONSOLIDATED
            CONDENSED STATEMENTS OF CHANGES IN MEMBERS' EQUITY**
 **For
            the Six Months Ended June 30, 2005**
 **(Dollars
            in thousands)**
 **(Unaudited)**











**Other**
            
            
            
            **Total****Members’**
            
            **comprehensive**
            
            **Accumulated**
            
            **members’****capital**
            
            **income
                (loss)**
            
            **deficit**
            
            **equity**Balance
                at December 31, 2004
            
            $
            58,582
            
            $
            2,859
            
            $
            (26,033
            )
            $
            35,408Currency
                translation adjustment
            
            
            —
            
            
            (3,798
            )
            
            —
            
            
            (3,798
            )Net
                loss
            
            
            —
            
            
            —
            
            
            (9,952
            )
            
            (9,952
            )Balance
                at June 30, 2005
            
            $
            58,582
            
            $
            (939
            )
            $
            (35,985
            )
            $
            21,658


























The
            accompanying notes are an integral part of the
 consolidated
            condensed financial statements.
  4
 
 **ADVANCED
            ACCESSORY HOLDINGS CORPORATION**
 **NOTES
            TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**
 **(Dollars
            in thousands)**
 **(Unaudited)**








**1.**  **BASIS
      OF PRESENTATION**





On
      April
      15, 2003, substantially all of the equity interests of Advanced Accessory
      Systems, LLC (the "Predecessor") were acquired by Castle Harlan Partners
      IV, L.P. (the "Acquisition"), a private equity investment fund organized
      and managed by Castle Harlan Inc., a private New York based equity firm. CHAAS
      Holdings, LLC ("CHAAS Holdings") was formed in April 2003 in connection with
      the
      Acquisition and was the direct parent of CHAAS Acquisitions, LLC, ("CHAAS
      Acquisitions") which was also formed pursuant to the Acquisition.





In
      January 2004, Advanced Accessory Holdings Corporation ("AAHC" or "the Company")
      was formed by our direct parent, CHAAS Holdings, in connection with an offering
      of our $88,000 aggregate principal amount at maturity, 131⁄4% Senior Discount
      Notes due 2011 (the "Senior Discount Notes"). At that time, CHAAS Holdings
      made
      a contribution of all of its equity interests in CHAAS Acquisitions to AAHC
      in
      exchange for all the outstanding membership units of AAHC. Subsequent to this
      transaction, CHAAS Holdings is the direct parent of AAHC and AAHC is the direct
      parent of CHAAS Acquisitions, LLC and the indirect parent of the Predecessor.
      Unless the context otherwise requires, all information which refers to
      "we,""our" or "us" refers to AAHC and its subsidiaries.





The
      Acquisition was accounted for in accordance with the purchase method of
      accounting. Accordingly, the purchase price of the Acquisition has been
      allocated to identifiable assets acquired and liabilities assumed based upon
      their estimated fair values at the acquisition date.





The
      North
      American subsidiaries of the Company use a fiscal month-end that corresponds
      to
      two four-week months and one five-week month per quarter, each ending on
      Saturday. The exception to this rule is at year-end, when the subsidiaries
      close
      on December 31. The Company’s Brink subsidiary uses the calendar month-end and
      year-end. The Company’s financial statements are dated as of the end of the
      calendar period, although they reflect the different closing dates identified
      above.





The
      accompanying unaudited consolidated financial statements have been prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America for interim financial information and with the instructions to Form
      10-Q. Accordingly, they do not include all information and footnotes required
      by
      accounting principles generally accepted in the United States of America for
      complete financial statements and should be read in conjunction with the Annual
      Report on Form 10-K for the fiscal year ended December 31, 2004.





In
      the
      opinion of the Company, the accompanying unaudited consolidated condensed
      financial statements contain all adjustments, which are normal and recurring
      in
      nature, necessary to present fairly its financial position as of June 30, 2005
      and December 31, 2004 and the results of its operations for the three and six
      months ended June 30, 2005 and 2004. The Company has reclassified certain prior
      year amounts to conform to the presentation of our current consolidated
      financial statements.








**2.**  **COMPREHENSIVE
      LOSS**





Comprehensive
      loss for the Company is as follows:





Three
                months ended
            
            Six
                months endedJune
                30, 2005
            
            June
                30, 2004
            
            June
                30, 2005
            
            June
                30, 2004Net
                loss
            
            $
            (2,283
            )
            $
            (42
            )
            $
            (9,952
            )
            $
            (997
            )Change
                in the cumulative translation adjustment, net of tax
            
            
            (2,108
            )
            
            (301
            )
            
            (3,798
            )
            
            (1,286
            )Comprehensive
                loss
            
            $
            (4,391
            )
            $
            (343
            )
            $
            (13,750
            )
            $
            (2,283
            )




5


**ADVANCED
            ACCESSORY HOLDINGS CORPORATION**
 **NOTES
            TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**
 **(Dollars
            in thousands)**
 **(Unaudited)**





**3.**  **CURRENCY
      CONTRACTS**





The
      Company has significant operations in Europe where the functional currency
      is
      the Euro. On February 12, 2004, when the Euro to the US Dollar exchange rate
      was
      1.28:1.00, the Company entered into a series of foreign currency forward option
      contracts related to the Euro ("Euro Collar"), which matured quarterly on a
      staggered basis. On May 12, 2004 when the Euro to US Dollar exchange rate was
      1.19:1.00, the Company entered into additional foreign currency option
      contracts. The Company provided a $1,900 letter of credit in support of the
      foreign currency option contracts. To the extent that the quarter end exchange
      rate fell between the Euro collar exchange rates, fulfillment of the Euro collar
      exchange contracts would have resulted in offsetting foreign currency gains
      and
      losses upon expiration. For each reporting period, the Company recorded the
      fair
      value, as determined by independent financial institutions, of open obligations
      and the resultant gains and losses were recorded in the Statement of Operations.
      For the three and six months ended June 30, 2005 and 2004 the Company recorded
      unrealized gains (losses) on foreign currency options in the amounts of $26,
      $164, ($440) and ($295), respectively. The final three option contracts expired
      during the second quarter of 2005 and five options expired during the first
      six
      months of 2005. Three option contracts expired during the second quarter of
      2004
      and six option contracts expired during the first six months of
      2004.





One
      of
      the options that expired in the second quarter of 2005 was the sale of a call
      option and was based on the average exchange rate of the period for which the
      option was active. The option expired in the money, requiring us to make a
      payment of $0.1 million. This amount was accrued at June 30, 2005 and was paid
      subsequent to that date.





Because
      of the expiration of the option contracts, the $1,900 letter of credit described
      above expired during the second quarter of 2005.








**4.**  **GOODWILL
      AND INTANGIBLE ASSETS**





The
      carrying amount of goodwill was $39,061 at June 30, 2005 and December 31, 2004.
      A summary of intangible assets identified by the Company in the allocation
      of
      the April 15, 2003 purchase consideration follows **:**







**Customer**
              **Contracts**
            
            **Customer**
              **Relationships**
            
            **Technology**
            
            **Intangible**
              **Pension
                Asset**
            
            **Tradename
                /**
              **Trademark**
            
            **Deferred**
              **Financing
                Costs**
            
            **Total**Amortization
                period in years
            
            
            *8
                - 10*
            
            
            *18
                - 21*
            
            
            *10*
            
            
            *15*
            
            
            *Indefinite*Balance
                at December 31, 2004
            
            $
            35,475
            
            $
            34,206
            
            $
            14,992
            
            $
            514
            
            $
            11,477
            
            $
            8,358
            
            $
            105,022Additions
            
            
            —
            
            
            —
            
            
            15
            
            
            —
            
            
            —
            
            
            92
            
            
            107Foreign
                currency translation
            
            
            (152
            )
            
            (1,428
            )
            
            (30
            )
            
            —
            
            
            (339
            )
            
            (55
            )
            
            (2,004
            )Amortization
            
            
            (2,059
            )
            
            (1,151
            )
            
            (900
            )
            
            —
            
            
            —
            
            
            (710
            )
            
            (4,820
            )Balance
                at June 30, 2005
            
            $
            33,264
            
            $
            31,627
            
            $
            14,077
            
            $
            514
            
            $
            11,138
            
            $
            7,685
            
            $
            98,305





Amortization
      expense of identifiable intangible assets for the three and six months ended
      June 30, 2005 was $2,404 and $4,820, respectively.









6










ADVANCED
          ACCESSORY HOLDINGS CORPORATION





**Item
                2.**
            **Management’s
                Discussion and Analysis of Financial
                Condition and Results of
                Operations**





The
      following discussion of our results of operations and financial condition should
      be read in conjunction with our financial statements and notes thereto included
      elsewhere in this Form 10-Q. This Form 10-Q contains forward-looking statements.
      Discussions containing forward-looking statements may be found in the material
      set forth above, in the material set forth below, as well as in this Form 10-Q
      generally. Forward-looking statements generally can be identified by the use
      of
      terms such as "may," "will," "should," "expect," "anticipate," "believe,"
      "intend," "plan," "estimate," "predict," "potential," "forecast," "project,"
      "will be," "continue" or variations of such terms, or the use of these terms
      in
      the negative.  Our actual results may differ significantly from the
      results
      discussed in the forward-looking statements and such differences may be
      material.  General risks that may impact the achievement of such forecasts
      include, but are not limited to: compliance with new laws and regulations,
      general economic conditions in the markets in which we operate, fluctuation
      in
      demand for our products and in the production of vehicles for which we are
      a
      supplier, significant raw material price fluctuations, labor disputes with
      our
      employees or those of our significant customers or suppliers, changes in
      consumer preferences, dependence on significant automotive customers, the level
      of competition in the automotive supply industry, pricing pressure from
      automotive customers, our substantial leverage, limitations imposed by our
      debt
      facilities, changes in the popularity of particular vehicle models or towing
      and
      rack systems, the loss of programs on particular vehicle models, risks
      associated with conducting business in foreign countries, other business factors
      and other risks detailed from time to time in the Company’s reports filed with
      the Securities & Exchange Commission.  Any such forward-looking
      statements are not guarantees of future performance and involve risks and
      uncertainties.  Actual events or results may differ materially from
      those
      discussed in the forward-looking statements.  All of these forward-looking
      statements are based on estimates and assumptions made by our management which,
      although believed to be reasonable, are inherently uncertain.  Given
      these
      risks and uncertainties, readers are cautioned not to place undue reliance
      on
      forward-looking statements.  We disclaim any obligation to update any
      forward-looking statements.





**OVERVIEW**





We
      are
      one of the world’s leading designers and manufacturers of exterior accessories
      for automotive original equipment manufacturers and the aftermarket. We design
      and manufacture a wide array of both rack systems and towing systems and related
      accessories. Our broad offering of rack systems includes fixed and detachable
      racks and accessories, which can be installed on vehicles to carry items such
      as
      bicycles, skis, luggage, surfboards and sailboards. Our towing products and
      accessories include trailer hitches, trailer balls, ball mounts, electrical
      harnesses, safety chains and locking pins. Our products are sold to OEM’s as
      standard accessories or options for a variety of light vehicles and to the
      aftermarket.





**Company
      Background**





On
      April
      15, 2003, substantially all of the equity interests of Advanced Accessory
      Systems, LLC (the "Predecessor") were acquired by Castle Harlan Partners IV,
      L.P. (the "Acquisition"), a private equity investment fund organized and managed
      by Castle Harlan Inc., a private New York based equity firm. CHAAS Holdings,
      LLC
      ("CHAAS Holdings") was formed in April 2003 in connection with the Acquisition
      and was the direct parent of CHAAS Acquisitions, LLC ("CHAAS Acquisitions"),
      which was also formed pursuant to the Acquisition.





In
      January 2004, Advanced Accessory Holdings Corporation ("AAHC" or "the Company")
      was formed by CHAAS Holdings in connection with an offering of our $88.0 million
      aggregate principal amount at maturity, 131⁄4% Senior Discount Notes due 2011 (the
      "Senior Discount Notes"). At that time, CHAAS Holdings made a contribution
      of
      all of its equity interests in CHAAS Acquisitions to AAHC in exchange for all
      the outstanding membership units of AAHC. Subsequent to this transaction, CHAAS
      Holdings is the direct parent of AAHC and AAHC is the direct parent of CHAAS
      Acquisitions and the indirect parent of the Predecessor. Unless the context
      otherwise requires, all information which refers to "we", "our" or "us" refers
      to AAHC and its subsidiaries.




7


**ADVANCED
            ACCESSORY HOLDINGS CORPORATION**





**RESULTS
      OF OPERATIONS**





**Three
      Months Ended June 30, 2005 Compared to the Three Months Ended June 30,
      2004**





*Net
      sales.* Net
      sales for the second quarter of 2005 were $128.4 million, representing an
      increase of $20.1 million, or 18.6%, compared with net sales of $108.3 million
      for the second quarter of 2004. This increase includes approximately $2.0
      million due to the increase of the average exchange rates between the US Dollar
      and primarily the Euro, the functional currency of Brink and SportRack Europe.
      Additionally, North American OEM sales increased approximately $11.9 million,
      primarily as a result of new program launches at SportRack. Offsetting these
      increases in sales were agreed-upon price concessions with certain large OEM
      customers at SportRack US of $0.9 million. Sales to our aftermarket customers
      in
      both North America and Europe increased $6.2 million of which approximately
      $3.8
      million represented revenue from price increases related to steel economics
      with
      the remainder attributable to other volume increases.





*Gross
      profit.* Gross
      profit for the second quarter of 2005 was $26.5 million, which represents an
      increase of $1.5 million, or 6.0%, compared with gross profit of $25.0 for
      the
      second quarter of 2004. Gross profit as a percentage of net sales was 20.7%
      for
      the second quarter of 2005 and 23.1% for the second quarter of 2004. Excluding
      a
      $0.3 million impact for foreign exchange, the increase in gross profit reflects
      the impact of higher volumes offset by OEM price reductions, manufacturing
      performance associated with product launches and depreciation related to capital
      investments. Increases in raw material costs on aftermarket products have been
      substantially recovered through price increases in the second quarter of 2005.
      The lower gross profit percentage relates to the factors above as well as the
      impact of overall product mix.





*Selling,
      administrative and product development expenses.* Selling,
      administrative and product development expenses for the second quarter of 2005
      were $16.5 million representing an increase of $0.9 million, or 5.8%, compared
      with $15.6 million for the second quarter of 2004. This increase is primarily
      due to the change in average exchange rates between the US Dollar and local
      currencies. Excluding foreign exchange, selling and engineering costs increased
      slightly and were partially offset by lower tooling and program
      costs.





*Operating
      income.* Our
      operating income for the second quarter of 2005 was $7.9 million representing
      an
      increase of $0.6 million, or 8.2%, compared with operating income of $7.3
      million for the second quarter of 2004. The increase resulted from increased
      gross profit net of increased selling, administrative and product development
      expenses.





*Interest
      expense.* Interest
      expense for the second quarter of 2005 was $7.1 million, which compares with
      interest expense of $7.1 million for the second quarter of 2004.





*Foreign
      currency loss.* Foreign
      currency loss in the second quarter of 2005 was $2.2 million compared to a
      foreign currency loss of $0.4 million in the second quarter of 2004. These
      losses were primarily attributable to the US Dollar denominated intercompany
      indebtedness of Brink, whose functional currency is the Euro. During the second
      quarters of both 2004 and 2005 the US Dollar strengthened in comparison with
      the
      Euro. The intercompany indebtedness for our Canadian subsidiaries are deemed
      to
      be permanently invested and therefore changes in the intercompany balances
      for
      these subsidiaries caused by foreign currency fluctuations have been recorded
      in
      the currency translation adjustment account and included in other comprehensive
      income.





*Provision
      for income taxes.* During
      the second quarter of 2005 we recorded a loss before income taxes of $1.3
      million and recorded an income tax provision of $1.0 million. The effective
      tax
      rate differs from the US federal income tax rate primarily due to changes in
      valuation allowances on the deferred tax assets of all North American operations
      and differences in the tax rates of foreign countries. During the second quarter
      of 2004 we had a net loss before taxes of $4,000 and recorded an income tax
      provision of $38,000.





*Net
      loss* .
      We
      recorded a net loss of $2.3 million in the second quarter of 2005 and a net
      loss
      of $42,000 in the second quarter of 2004. The net losses were a result of the
      items discussed above related to net sales, gross profit, foreign currency
      loss and the other expense and income items.






8





**ADVANCED
          ACCESSORY HOLDINGS CORPORATION**





*Net
      sales.* Net
      sales for the first six months of 2005 were $239.7 million, representing an
      increase of $34.7 million, or 16.9%, compared with net sales of $205.0 million
      for the first six months of 2004. This increase includes approximately $4.7
      million due to the increase of the average exchange rates between the US Dollar
      and primarily the Euro, the functional currency of Brink and SportRack Europe.
      Additionally, North American OEM sales increased approximately $18.7 million,
      primarily as a result of new program launches at SportRack. Offsetting increased
      sales were agreed-upon price concessions with certain large OEM customers at
      SportRack US of $2.3 million. Sales to our aftermarket customers in both North
      America and Europe increased $12.1 million partially attributable to price
      increases in the aftermarket of $7.0 million to offset raw material economics.





*Gross
      profit.* Gross
      profit for the first six months of 2005 was $46.3 million, which represents
      a
      decrease of $1.3 million, or 2.7%, compared with gross profit of $47.6 for
      the
      first six months of 2004. Gross profit as a percentage of net sales was 19.3%
      for the first six months of 2005 versus 23.2% for the first six months of 2004.
      The overall decrease in gross profit reflects OEM price reductions, plant
      operating manufacturing performance associated with product launches and
      depreciation related to capital investments offset by the impact of higher
      volumes and favorable exchange rates between the US Dollar and local currencies.
      Increases in raw material costs on aftermarket products have been substantially
      recovered through price increases in the first six months of 2005. The lower
      gross profit percentage relates to the factors above as well as the impact
      of
      overall product mix.





*Selling,
      administrative and product development expenses.* Selling,
      administrative and product development expenses for the first six months of
      2005
      were $33.1 million representing an increase of $2.4 million, or 7.8%, compared
      with $30.7 million for the first six months of 2004. This increase is due to
      the
      change in average exchange rates between the US Dollar and local currencies
      and
      selling and engineering expense increases, offset by lower tooling and program
      costs.





*Operating
      income.* Our
      operating income for the first six months of 2005 was $9.0 million representing
      a decrease of $3.7 million, or 29.1%, compared with operating income of $12.7
      million for the first six months of 2004. The decrease resulted from decreased
      gross profit and increased selling, administrative and product development
      expenses.





*Interest
      expense.* Interest
      expense for the first six months of 2005 was $14.5 million representing an
      increase of $1.3 million or 9.8%, compared with interest expense of $13.2
      million for the first six months of 2004. This increase is primarily the result
      of interest on the Senior Discount Notes for the full six-month period in 2005
      but only five months in 2004 (issued February 2004) and higher overall
      outstanding variable rate debt and slightly higher interest rates during the
      first six months of 2005 relative to the similar period in 2004.





*Foreign
      currency loss.* Foreign
      currency loss in the first six months of 2005 was $3.5 million compared to
      a
      foreign currency loss of $1.1 million in the first six months of 2004. These
      losses were primarily attributable to the US Dollar denominated intercompany
      indebtedness of Brink, whose functional currency is the Euro. During the first
      six months of both 2004 and 2005 the US Dollar strengthened in comparison with
      the Euro. The intercompany indebtedness for our Canadian subsidiaries are deemed
      to be permanently invested and therefore changes in the intercompany balances
      for these subsidiaries caused by foreign currency fluctuations have been
      recorded in the currency translation adjustment account and included in other
      comprehensive income.





*Provision
      for (Benefit from) income taxes.* During
      the first six months of 2005 we recorded a loss before income taxes of $9.0
      million and recorded an income tax provision of $1.0 million. The effective
      tax
      rate differs from the US federal income tax rate primarily due to changes in
      valuation allowances on the deferred tax assets of all North American operations
      and differences in the tax rates of foreign countries. During the first six
      months of 2004 we had a net loss before taxes of $1.4 million and recorded
      an
      income tax benefit of $0.4 million.





*Net
      loss* .
      We
      recorded a net loss of $10.0 million in the first six months of 2005 and a
      net
      loss of $1.0 million in the first six months of 2004. The net losses were a
      result of the items discussed above related to net sales, gross profit, foreign
      currency loss and the other expense and income items.






9





**ADVANCED
          ACCESSORY HOLDINGS CORPORATION**


**LIQUIDITY
      AND CAPITAL RESOURCES**





Our
      principal liquidity requirements are to service our debt and meet our working
      capital and capital expenditure needs. Our indebtedness at June 30, 2005 was
      $263.3 million including current maturities of $3.4 million.





In
      2004
      our operating results and operating cash flows were negatively impacted
      primarily by the costs associated with launching an unprecedented number of
      new
      roof rack programs, the high costs of steel and pricing pressures from certain
      OEM customers. As a result of these and other factors, our availability under
      our revolving credit facilities declined to $27.1 million at December 31, 2004
      from $38.1 million available at September 30, 2004. Although we met our
      covenants for the quarter ended December 31, 2004, we anticipated that we would
      be unable to meet our fixed charge coverage ratio and senior secured leverage
      ratio covenants for future quarters. On March 30, 2005, we entered into the
      Fourth Amendment to the Amended and Restated Credit Agreement (the "Fourth
      Amendment") with General Electric Capital Corporation individually as a lender
      and as agent for the lenders referred to therein to modify the fixed charge
      coverage ratio and the senior secured leverage ratio.





Under
      the
      modified fixed charge coverage ratio covenant, the required minimum fixed charge
      coverage ratio will be determined quarterly for all borrowers for specified
      quarterly periods and for European borrowers for specified quarterly periods.
      Prior to this modification the required minimum fixed charge coverage ratios
      for
      all borrowers and their subsidiaries were 1.15:1.00. As modified, the required
      minimum fixed charge coverage ratios for all borrowers and their subsidiaries
      range from 1.15:1.00 for each fiscal quarter from the fiscal quarter ending
      June
      30, 2004 through and including the fiscal quarter ending December 31, 2004;
      1.05:1.00 for the fiscal quarter ending December 31, 2005; and 1.15:1.00 for
      each fiscal quarter ending thereafter. The required minimum fixed charge
      coverage ratio for the European borrowers and their subsidiaries is 1.25:1.00
      for the fiscal quarters ending March 31, 2005, June 30, 2005 and September
      30,
      2005. The actual fixed charge coverage ratio for the European borrowers for
      the
      fiscal quarter ending June 30, 2005 was 1.88:1.00 and we were in compliance
      with
      this covenant as of June 30,  2005.





The
      modified senior secured leverage ratio covenant requires that we meet a senior
      secured leverage ratio of 1.75:1.00 for the fiscal quarters ending March 31,
      2005 and June 30, 2005; 1.50 to 1.00 for the fiscal quarter ending September
      30,
      2005; and 1.25:1.00 for each fiscal quarter ending thereafter. Prior to this
      modification, the credit facility required that we meet a senior secured
      leverage ratio of 1.25:1.00 for each fiscal quarter. The actual leverage ratio
      for the fiscal quarter ending June 30, 2005 was 1.06:1.00 and we were in
      compliance with this covenant as of June 30, 2005.





Although
      we anticipate the ability to meet our modified covenants, there can be no such
      assurance. Our principal sources of liquidity are funds derived from operations
      and borrowings under our revolving credit facilities. Management believes that,
      based on current and expected levels of operations, cash flows from operations
      and borrowings under the revolving credit facilities will be sufficient to
      fund
      its debt service requirements, working capital needs and capital expenditures
      for the next twelve months, although no assurances can be given in this regard.
      Our ability to fund operations, make scheduled payments of interest and
      principal on our indebtedness and maintain compliance with the terms of our
      revolving credit facilities, including our fixed charge coverage ratio covenant
      and senior secured leverage ratio covenant, depends on our future operating
      performance, which is subject to economic, financial, competitive and other
      factors beyond our control. If we are unable to generate sufficient cash flows
      from operations to meet our financial obligations and achieve compliance with
      our debt covenants, there would be a material adverse effect on our business,
      financial condition and results of operations.






10





**ADVANCED
          ACCESSORY HOLDINGS CORPORATION**


**Working
      Capital and Cash Flows**





Working
      capital and key elements of the consolidated statement of cash flows
      are:





June
                30,
              2005
            
            December
                31,
              2004(in
                thousands)Working
                Capital
            
            $
            82,040
            
            $
            77,916





Six
                months ended
              June
                30,2005
            
            2004(in
                thousands)Cash
                flows provided by (used for) operating activities
            
            $
            (6,544
            )
            $
            1,158Cash
                flows used for investing activities
            
            $
            (6,766
            )
            $
            (90,472
            )Cash
                flows provided by financing activities
            
            $
            5,045
            
            $
            99,789





*Working
      Capital*





Working
      capital increased by $4.1 million to $82.0 million at June 30, 2005 from $77.9
      million at December 31, 2004. This increase is primarily due to an increase
      in
      accounts receivable of $20.7 million partially offset by decreases in cash,
      inventory and other current assets of $9.0 million, $3.6 million and $0.4
      million, respectively and increases in accounts payable, other accrued
      liabilities and current maturities of long-term debt of $1.8 million, 1.7
      million and $0.3 million. The net working capital increase was also negatively
      impacted by the decreased exchange rate between the US Dollar and local
      currencies as of June 30, 2005 as compared with the exchange rate as of December
      31, 2004.





Two
      of
      the major components of the working capital change were accounts receivable
      and
      inventory. The increase in accounts receivable was attributable to the timing
      of
      payments from OEM customers and to increased sales levels on a year-to-date
      basis as compared with the last several months of 2004. Inventory decreased
      as a
      result of the seasonal nature of certain segments of the business and an overall
      company focus on increasing inventory turnover.





*Investing
      Activities*





Cash
      flow
      used for investing activities for the first six months of 2005 and 2004 included
      acquisitions of property and equipment of $6.8 million and $6.1 million,
      respectively, and were primarily for the expansion of capacity, productivity,
      process improvements and maintenance. In conjunction with our Senior Discount
      Notes offering of January 2004, our direct parent CHAAS Holdings made a
      contribution of all the outstanding membership units in CHAAS Acquisitions
      to
      AAHC for all the outstanding membership units of AAHC.





*Financing
      Activities*





During
      the first six months of 2005, financing cash flows included increased borrowings
      under the revolving line of credit of $6.2 million and repayment of debt of
      $1.0
      million.





During
      the first six months of 2004, financing cash flows included the issuance of
      our
      membership units for $101.1 million, proceeds from the issuance of our Senior
      Discount Notes of $50.3 million, payment of debt issuance costs of $2.5 million,
      repayment of debt of $5.8 million, a reduction in the revolving line of credit
      of $0.8 million and a payment to our direct parent of $42.5 million to redeem
      a
      portion of their equity interest.





**Debt
      and Credit Sources**





Our
      indebtedness at June 30, 2005 was $263.3 million. We expect that our primary
      sources of cash will be from operating activities and borrowings under our
      revolving credit facilities. As of June 30, 2005, we had borrowings under the
      revolving credit facilities totaling $29.0 million and had $20.2 million of
      available borrowing capacity. Standby letters of credit totaling $3.9 million
      providing security for our US workers compensation program reduced borrowing
      availability.





On
      March
      30, 2005 we entered into the Fourth Amendment to the Amended and Restated Credit
      Agreement. See the discussion of the amendment to the credit facility in "-
      Liquidity and Capital Resources".






11





**ADVANCED
          ACCESSORY HOLDINGS CORPORATION**


*International
      Operations*





We
      conduct operations in several foreign countries including Canada, the Czech
      Republic, Denmark, France, Germany, Italy, The Netherlands, Poland, Spain,
      Sweden and the United Kingdom. Net sales from international operations during
      the first six months of 2005 were $92.2 million, or 38.5% of our net sales.
      At
      June 30, 2005, assets associated with these operations were approximately 37.5%
      of total assets, and we had indebtedness denominated in currencies other than
      the US Dollar of approximately $21.8 million.





Our
      international operations may be subject to volatility because of currency
      fluctuations, inflation and changes in political and economic conditions in
      these countries. Most of the revenues and costs and expenses of our operations
      in these countries are denominated in the local currencies. The financial
      position and results of operations of the Company's foreign subsidiaries are
      measured using the local currency as the functional currency.





*Currency
      contracts*





We
      have
      significant operations in Europe where the functional currency is the Euro.
      On
      February 12, 2004, when the Euro to the US Dollar exchange rate was 1.28:1.00,
      we entered into a series of foreign currency forward option contracts related
      to
      the Euro ("Euro Collar"), which matured quarterly on a staggered basis. On
      May
      12, 2004 when the Euro to US Dollar exchange rate was 1.19:1.00, we entered
      into
      additional foreign currency option contracts. We provided a $1.9 million letter
      of credit in support of the foreign currency option contracts. To the extent
      that the quarter end exchange rate fell between the Euro collar exchange rates,
      fulfillment of the Euro collar exchange contracts would have resulted in
      offsetting foreign currency gains and losses upon expiration. For each reporting
      period we recorded the fair value, as determined by independent financial
      institutions, of open obligations and the resultant gains and losses were
      recorded in the Statement of Operations. For the three and six months ended
      June
      30, 2005 and 2004 the Company recorded unrealized gains (losses) on foreign
      currency options in the amounts of $26, $164, ($440) and ($295), respectively.
      The final three option contracts expired during the second quarter of 2005
      and
      five options expired during the first six months of 2005. Three option contracts
      expired during the second quarter of 2004 and six option contracts expired
      during the first six months of 2004.





One
      of
      the options that expired in the second quarter of 2005 was the sale of a call
      option and was based on the average exchange rate of the period for which the
      option was active. The option expired in the money, requiring us to make a
      payment of $0.1 million. This amount was accrued at June 30, 2005 and was paid
      subsequent to that date.





Because
      of the expiration of the option contracts, the $1,900 letter of credit described
      above expired during the second quarter of 2005.





*Recently
      Issued Accounting Standards*





In
      March
      2005, the FASB issued FIN 47, "Accounting for Conditional Asset Retirement
      Obligations." FIN 47 clarifies that a conditional asset retirement obligation,
      as used in SFAS 143, "Accounting for Asset Retirement Obligations," refers
      to a
      legal obligation to perform an asset retirement activity in which the timing
      and/or method of the settlement are conditional on a future event that may
      or
      may not be within the control of the entity. Accordingly, an entity is required
      to recognize a liability for the fair value of a conditional asset retirement
      obligation if the fair value can be reasonably estimated. FIN 47 is effective
      January 1, 2006, with early adoption allowed. We have not yet determined the
      impact, if any, FIN 47 will have on the Company's consolidated financial
      statements.






12





**ADVANCED
          ACCESSORY HOLDINGS CORPORATION**


**Item
      3.**  **Quantitative
      and Qualitative Disclosures About Market Risk**





In
      May
      2004, we executed several foreign currency option contracts. See " -
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations - Debt and Credit Sources - Currency Contracts".








**Item
      4.**  **Controls
      and Procedures**





Under
      the
      supervision and with the participation of management, including our principal
      executive officer and principal financial officer, the Company has evaluated
      the
      effectiveness of the design and operation of its disclosure controls and
      procedures as of June 30, 2005 and, based on their evaluation, the principal
      executive officer and principal financial officer have concluded that these
      controls and procedures are effective. There were no significant changes in
      internal controls or in other factors that could significantly affect these
      controls during the quarter.





Disclosure
      controls and
      procedures are the Company’s controls and other procedures that are designed to
      ensure that information required to be disclosed by the Company in the reports
      that it files or submits under the Securities Exchange Act of 1934, as amended
      (the "Exchange Act"), is recorded, processed, summarized and reported, within
      the time periods specified in the Securities and Exchange Commission’s rules and
      forms. Disclosure controls and procedures include, without limitation, controls
      and procedures designed to ensure that information required to be disclosed
      in
      the reports that the Company files under the Exchange Act is accumulated and
      communicated to management, including the principal executive officer and
      principal financial officer, as appropriate to allow timely decisions regarding
      required disclosure.











**PART
      II. OTHER INFORMATION AND SIGNATURE**





**Item
      1.**  **Legal
      Proceedings**





From
      time
      to time, we are subject to routine legal proceedings incidental to the operation
      of our business. The outcome of any threatened or pending proceedings is not
      expected to have a material adverse effect on our financial condition, operating
      results or cash flows, based on our current understanding of the relevant facts.
      The Company maintains insurance coverage against claims in an amount that it
      believes to be adequate.








**Item
      2.**  **Changes
      in Securities, Use of Proceeds and Issuer Purchases of Equity
      Security**





None








**Item3.**  **Defaults
      Upon Senior Securities**





None








**Item4.**  **Submission
      of Matters to a Vote of Security-Holders**





None








**Item5.**  **Other
      Information**





None






13





**ADVANCED
          ACCESSORY HOLDINGS CORPORATION**


**Item6.**  **Exhibits**





Exhibit
                31.1
            Certification
                of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14, as
                Adopted
                Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002





Exhibit
                31.2
            Certification
                of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14, as
                Adopted
                Pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002





Exhibit
                32.1
            Certification
                of Chief Executive Officer Pursuant To 18 U.S.C. Section 1350, as
                Adopted
                Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002





Exhibit
                32.2
            Certification
                of Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, as
                Adopted
                Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002
















14


**ADVANCED
          ACCESSORY HOLDINGS CORPORATION**





Pursuantto
      the requirements of the Securities Exchange Act
      of 1934, the Registrant has duly caused this report to be signed on its behalf
      by the undersigned thereunto duly authorized.











ADVANCED
                ACCESSORY HOLDINGS CORPORATIONDate:
                August 15, 2005
            /s/
                Ronald J. GardhouseRonald
                J. GardhouseChief
                Financial Officer(Principal
                Financial Officerand
                Authorized Signatory)




















15





**ADVANCED
          ACCESSORY HOLDINGS CORPORATION**
  EXHIBIT
          INDEX





Exhibit
            Description31.1
            Certification
                of Chief Executive Officer Pursuant to
                Rules 13a-14 and 15d-14, as Adopted Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200231.2
            Certification
                of Chief Financial Officer Pursuant to
                Rules 13a-14 and 15d-14, as Adopted Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200232.1
            Certification
                of Chief Executive Officer Pursuant to 18
                U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                the
                Sarbanes-Oxley Act of 200232.2
            Certification
                of Chief Financial Officer Pursuant to 18
                U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                the
                Sarbanes-Oxley Act of 2002