Trans-China Automotive Holdings Limited announced on profit guidance for half year ended 30 June 2023 dated 12 July 2023 and voluntary business update for 3rd quarter ended 30 September 2023 dated 2 November 2023, and wishes to provide shareholders with profit guidance for the year ended 31 December 2023. The Company announced that, following a preliminary assessment of the unaudited financial results of the Group for FY2023 that is currently available to the Board of Directors, the Company is expected to record a net loss for FY2023 compared with a net profit after taxes for the full year ended 31 December 2022. This is mainly attributable to: Low consumer confidence - the Chinese economy is estimated to have expanded by 5.2% in FY2023 over FY2022, a low base when much of China was affected by COVID19 pandemic controls.

Although business activity has resumed, much of the greater economy is affected by the ongoing property crisis, tepid domestic consumption and weak exports. This has resulted in low consumer sentiment affecting luxury and super- luxury car sales. Intensively competitive car market ­ according to the China Passenger Car Association new energy vehicles sales grew by 36.2% units to 7.7 million units during 2023.

Over the past few years there have been numerous NEV introductions by new market entrants and established manufacturers. While most of the NEVs fall below the premium segment, the soft economy downgraded some spending leading to the rapid growth in mass market NEV brands. Further, in early 2023, leading NEV brands began a discounting campaign which ignited an intense price war that persisted for much of FY2023.

As a result of these factors, the Group's new vehicle sales were lower and gross margins negative in FY2023 resulting in a net loss for the Company in FY2023. New expansion projects embarked in FY2022 and FY2023 have not reached profitability. The Company opened the Guangzhou Genesis dealership and Shenzhen BMW Service Center in 2022 and Changsha and Foshan Genesis dealerships in 2023.

As a result of planned rationalization of the Company's supercar showrooms, the assets related to supercar division have been impaired resulting in a non-cash impairment charge.