Recently, the Ministry of Commerce of the People's Republic of China released Development Guidance on Auto Circulation Industry during the 12^th Five-Year Plan, according to which, China auto circulation industry will focus on improving concentration ratio, transforming development pattern and developing second-hand car market.

We believe that launch of the Guidance will influence auto trade industry in the following three aspects:

1. Normalization of merger and acquisition. With the improvement of concentration rate, auto circulation industry will present polarization situation. Large-scaled and powerful auto dealers possess remarkable advantages over cost control, risk resistance, distribution channel and discourse right, while small dealers cannot escape the fate of bankruptcy or being acquired.

2. To go public and financing is preferred. Under the condition of tightened monetary policy, auto dealers will be inclined to go public for financing in order to ease funding pressure.

3. Transformation of profit model. Along with the car population exceeding 100 million units in China, auto aftermarket is expanding gradually, thus car dealers will transfer their profit source to after-sales maintenance and repair.