Zongshen PEM Power Systems Inc.

Zongshen PEM Power Systems Inc.

August 04, 2011 09:00 ET

ZPP Updates on Second Quarter 2011 Shipments

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 4, 2011) - Zongshen PEM Power Systems Inc. ("ZPP", or the "Company") (TSX:ZPP) is pleased to provide an update on the Company second quarter 2011 shipments which totaled 125,800 motorcycles and electric two wheelers.

Large Gas Bike

The second quarter 2011 total large gas bike shipments were 117,300 units, a decrease of 6.5% from first quarter 2011. The domestic and exports shipments were respectively 43.1% and 56.9% of total shipments for second quarter 2011.

Domestic Shipments

Second quarter 2011 domestic shipments totaled 50,600 units, a decrease of 30% from first quarter 2011 as motorcycle sales in the second quarter continued to be affected by the uneven enforcement of a recent emission standard change, Country Standard III ("G3") enacted China wide on March 1, 2011. G3 bans the manufacturing of motorcycles that do not meet the higher emission standard and most of the large motorcycle manufacturers are complying with G3. However, compliance and enforcement of G3 has been less uniform amongst smaller manufacturers, which have continued to produce non-emission compliant motorcycles that compete with higher priced G3 motorcycles. As a result of the uneven compliance and enforcement of G3 and because second quarter is a seasonally slower quarter than first quarter, domestic shipments have fallen on a quarter sequential basis.

Export Shipments

ZPP exported a total of 66,700 motorcycles, an increase of 25% compared with the first quarter of 2011. Exports to Brazil, Thailand, Nigeria and countries in the Southeast Asia were particularly strong as a result of strong local economies and as increased local marketing activities.

Small Gas Motorcycles & Electric Two-Wheelers

Unit shipments of small gas motorcycles and electrical motorcycles were 8,500 units, an increase of 46% from first quarter, 2011. The second quarter is traditionally a stronger quarter than the first quarter for small gas motorcycles and electric two-wheelers because of warmer weather. Cold weather negatively affects the battery life of electric vehicles.

The Company sold its 1,000th Toronto e-motorcycle in June since the product's introduction in September of last year. Toronto is China's first e-motorcycle which performs like a 110-120 cc gas motorcycle, but because it is battery powered, the Toronto's operating costs are 1/10th of a similar gas powered motorcycle. The Company is expecting to introduce a higher-powered e-motorcycle model in the third quarter of 2011 to the Chinese domestic market.

"We are encouraged by our export results which are continuing to improve, in part because of our entrenched distributor relationships and marketing investments we have made in our key markets. Although our domestic market continue to be affected by uneven compliance of the new emissions standard, we expect that over the longer term the emission standard will be favorable to large manufacturers as the higher standard will spur an industry consolidation and increase overall product quality which ZPP's motorcycles are known for," said Mr. Zuo Zongshen, CEO and Chairman of ZPP.

Shipment information

Second Quarter, 2011

China International
Large gas bikes 50,600 - 19,300 47,400 117,300
Small gas bikes 7,000 - - - 7,000
Electric bikes 1,000 - 100 400 1,500
Total 58,600 - 19,400 47,800 125,800

First Quarter, 2011

China International
Large gas bikes 72,100 - 16,300 37,200 125,600
Small gas bikes 5,000 - - - 5,000
Electric bikes 800 - - - 800
Total 77,900 - 16,300 37,200 131,400
CBU Complete Built Units; units are shipping in assembled form
KD The total of Complete Knocked Down and Semi Knocked Down units; units are shipped in completely or semi-complete disassembled kits

About Zongshen PEM Power Systems Inc.

Zongshen PEM Power Systems Inc. is a public company trading under the symbol ZPP on the Toronto Stock Exchange. The Company manufactures gas motorcycles, electric motorcycles, electric bicycles and other e-vehicles in China for the Chinese domestic and international markets. Zongshen PEM Power System's largest shareholder is Zongshen Industrial Group, one of China's largest manufacturers and distributors of engines and power equipment.

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