HONG KONG, March 22 /Xinhua-PRNewswire/ -- Xinhua Far East China Ratings today downgraded Brilliance China Automotive Holdings Ltd ("CBA" or "the Company", HK1114; NYSE: CBA) from BBB+ to BBB- domestic currency issuer credit rating. The rating outlook is also changed from stable to negative. The downgrade reflects Xinhua Far East's negative view on CBA's competitiveness as an independent domestic brand in the tougher Chinese sedan market and its falling market position in the minibus sector. It also incorporates concerns about the Company's slow market responsiveness and its battered image among consumers resulting from a turbulent turnover of management, which has undermined its market share and profitability. The new rating also reflects a possible liquidity risk if CBA convertible bond holders execute their redemption options on the bond in 2006. Xinhua Far East notes that CBA's sedan sales have slipped despite solid growth rates in China's sedan market of 15.2% in 2004 and 24.3% in 2005. As market growth decelerates, CBA will face further squeezes with more players entering the business sedan submarket, its major revenue source in the past. CBA's weak R&D capability prevents it from not only launching new models to catch up with major rivals, but also from quickly expanding its product lines to faster-growing niches like economic or mini-sedans. Moreover, the minibus sector, another core business for the Company, has also been reporting disappointing results. CBA's share in the domestic minibus market fell from 24.2% in 2000 to 15.5% in 2004. The turnover and profit margin of the minibus sector (including auto parts) has slid also, largely due to lower prices and its condensed high-end product mix. In Xinhua Far East's view, the turmoil in CBA's management has impeded its responsiveness to the market and impaired its ability to enhance operational efficiency, while undermining consumer confidence in its products. Despite strong recovery in the Company's JV with BMW since the launch of the BMW 3 series in Q205 and the opportunity for the Company to enhance its competitive strength in the low-to-medium end market with the recent launch of the Junjie model, Xinhua Far East believes it will get little help from its major business lines of minibus and Zhonghua sedan in the near future. The rating outlook for CBA is negative. Xinhua Far East expects growth in sedan demand to stall even further over the next few years after pent-up demand has been fully released on account of the current market's aggressive price cuts and greater availability. The business sedan niche, an area in which CBA used to excel, is more likely to be affected by macro-controls. Additionally, it will take time for the Company to establish a competitive position in the rapidly changing household sedan market. The first China automaker to be listed abroad, CBA produces the Zhonghua, Grandeur and Junjie sedans and the Jinbei minibuses. It sold 61,600 minibuses and 11,000 Zhonghua sedans in 2004, contributing to RMB6.54 billion in turnover for the year. CBA holds a 49% stake in Brilliance BMW, a JV with BMW, which produces the BMW 5 series and 3 series in China. Zhonghua is one of the key domestic brands in China's sedan market. For the rating report summary, please visit http://www.xinhuafinance.com/creditrating . Note to Editors: About Xinhua Far East China Ratings Xinhua Far East China Ratings (Xinhua Far East) is a pioneering venture in China that aims to rank credit risks among corporations in China. It is a strategic alliance between Xinhua Finance (TSE Mothers: 9399), and Shanghai Far East Credit Rating Co., Ltd. Shanghai Far East became a Xinhua Finance partner company in 2003 and the first China member of The Association of Credit Rating Agencies in Asia in December 2003. Capitalizing on the synergy between Xinhua Finance and Shanghai Far East, Xinhua Far East's rating methodology and process blend unique local market knowledge with international rating standards. Xinhua Far East is committed to provide investors with independent, objective, timely and forward-looking credit opinions on Chinese companies. It aims to help investors differentiate the credit risks among the corporations in China, thereby, cultivating their awareness and promoting information disclosures and transparency in China market. For more information, see http://www.xfn.com/creditrating . About Xinhua Finance Limited Xinhua Finance Limited is China's unchallenged leader in financial information and media, and is listed on the Mothers board of the Tokyo Stock Exchange (symbol: 9399) (OTC ADRs: XHFNY). Bridging China's financial markets and the world, Xinhua Finance serves financial institutions, corporations and re-distributors through four focused and complementary service lines: Indices, Ratings, Financial News and Investor Relations. Founded in November 1999, the Company is headquartered in Shanghai with 21 news bureaus and offices in 18 locations across Asia, Australia, North America and Europe. For more information, please visit http://www.xinhuafinance.com/ . About Shanghai Far East Credit Rating Co., Ltd Shanghai Far East Credit Rating Co., Ltd. is the first and leading professional credit rating company with comprehensive business coverage in China. It is an independent agency established by the Shanghai Academy of Social Sciences with the mission to develop internationally accepted standards for capital market in China. The company is a pioneer in conducting bond- rating business in China. For years, it has been authorized by the Shanghai branch of the PBOC to undertake loan certificate credit rating. Since establishment, it has rated over 1,000 corporate long-term bonds and commercial papers, based on the principles of objectivity, fairness and independence. The company has also maintained over 50% market share in the loan certificate-rating sector in Shanghai for three consecutive years. With its strong local presence and knowledge, it provides investors with unique and the most insightful credit opinion. For more information, see http://www.fareast-cr.com/ . For more information, please contact: Hong Kong Joy Tsang, Corporate & Investor Communications Director, Xinhua Finance Tel: +852-3196-3983, +8621-6113-5999 or +852-9486-4364 Email: US David Leeney, Taylor Rafferty (IR/PR Contact in US) Tel: +1-212-889-4350 Email: DATASOURCE: Xinhua Far East China Ratings CONTACT: Joy Tsang of Xinhua Finance, +852-3196-3983, or +852-9486-4364, or +8621-6113-5999, or ; David Leeney of Taylor Rafferty for Xinhua Finance, +1-212-889-4350, or

Copyright