Guangzhou Automobile Group Co., Ltd. - Proxy Solicitation & Information Statement 2011

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountants or other professional adviser.

If you have sold or transferred all your shares in the Company, you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or transferee(s) or to the bank, stockbroker, or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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GUANGZHOU AUTOMOBILE GROUP CO., LTD. 廣州汽車集團股份有限公司

(a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 2238)

(1) DISCLOSEABLE TRANSACTION — PROPOSED A SHARE ISSUE AND THE PROPOSED MERGER AND

(2) PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

A letter from the Board is set out from pages 5 to 20 of this circular.

The EGM will be held at Island Ballroom C, Level 5, Island Shangri-La Hong Kong, Pacifi c Place, Supreme Court Road, Central, Hong Kong on Monday, 27 June 2011 at 9:30 a.m. to consider and if thought fi t, to approve the A Share Issue, the Proposed Merger and amendments to the articles of association. A notice convening the EGM, a form of proxy for use at the EGM and a reply slip have been despatched to the Shareholders on 25 March 2011 and are also published on the websites of the Hong Kong Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.gagc.com.cn). Whether or not you intend to attend the EGM, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon not less than 24 hours before the time fi xed for holding the EGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting at the EGM should you so wish.

11 June 2011

CONTENT

DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
APPENDIX I—PROFIT FORECASTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
APPENDIX II—PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
AFTER LISTING AND ISSUE OF A SHARES. . . . . . . . . . . . . . . . . . . . . . .	28

— i —

DEFINITIONS

In this circular, the following expressions shall have the following meanings, unless the context otherwise requires:

“A Share(s)” the ordinary share(s) subscribed for in RMB, which are proposed to be issued by the Company pursuant to the A Share Issue
“A Share Issue” the proposed issue of not more than 470,113,336 A Shares by the Company to be listed on the Shanghai Stock Exchange for the implementation of the Proposed Merger
“Additional Cash Alternative” the additional cash alternative under the Proposed Merger to the Participated Shareholders, pursuant to which the Participated Shareholders can transfer the A Shares held by them to the Additional Cash Alternative Providers at the price of RMB9.09 per A Share, details of which are set out in the section headed “A. Proposed A Share Issue and the Proposed Merger — 6. The Additional Cash Alternative” in the Letter from the Board
“Additional Cash Alternative CNMIC and GFIH Provider(s)” “AIC” the State Administration for Industry and Commerce of the People’s Republic of China or its relevant local counterpart
“Articles” the articles of association of the Company, as amended from time to time
“Assenting Shareholders” Shareholders who have participated in the EGM and voted for the Proposed Merger
“Average Trading Price” being the total turnover divided by total transacted number “Board” the board of Directors of the Company “CASBE” China Account Standards for Business Enterprises and related implementation guidance notes
“Cash Alternative” the cash alternative under the Proposed Merger to the GC Target Shareholders which is set at the price of RMB12.65 per GC Share, subject to certain conditions, details of which are set out in the section headed “A. Proposed A Share Issue and the Proposed Merger — 5. The Cash Alternative” in the Letter from the Board
“Cash Alternative Provider(s)” the Company, CNMIC and GFIH “Changfeng Group” 長豐（集團）有限責任公司(Changfeng (Group) Company Limited*), a substantial shareholder of GC holding approximately 21.98% of equity interest in GC as at the Latest Practicable Date

— 1 —

DEFINITIONS

“Company”	Guangzhou Automobile Group Co., Ltd. (廣州汽車集團股份有限
	公司) (Stock Code: 2238), a joint stock company established under
	the laws of the PRC with limited liability on 28 June 2005, the H
	Shares of which are listed on the Main Board of the Hong Kong
	Stock Exchange
“Company Law”	the Company Law of the People’s Republic of China (as amended
	from time to time)
“CNMIC”	China National Machinery Industry Corporation Limited (中國機
	械工業集團有限公司), a company incorporated under PRC law,
	one of the promoters of the Company, holding 2.3622% of equity
	interest in the Company as at the Latest Practicable Date
“CSRC”	China Securities Regulatory Commission
“Director(s)”	director(s) of the Company
“Dissenting Shareholders”	Shareholders who have participated in the EGM and voted against
	the Proposed Merger
“Domestic Shares”	ordinary share(s) of nominal value of RMB1.00 each in the share
	capital of the Company which are subscribed for or credited as
	fully paid in RMB by PRC citizens and/or PRC incorporated
	entities
“EGM”	the f rst extraordinary general meeting of the Company of 2011, to
	be held to approve, inter alia, the A Share Issue and the Proposed
	Merger
“Exchange Ratio”	the ratio at which a number of A Shares of the Company would be
	exchanged for one GC Share under the Proposed Merger, being the
	ratio of 1.6 A Shares to one GC Share
“GAIG”	Guangzhou Automobile Industry Group Co., Ltd. (廣州汽車工
	業集團有限公司), a limited liability company established on
	18 October 2000 under the laws of PRC, being the controlling
	shareholder of the Company holding approximately 58.84% of the
	issued share capital of the Company as at the Latest Practicable
	Date
“GFIH”	廣東粵財投資控股有限公司(Guangdong Finance Investment
	(Holding) Corporation Limited*), a company incorporated under
	PRC law. As at the Latest Practicable Date, GFIH does not hold
	any equity interest in the Company
“GC”	GAC Changfeng Motor Co., Ltd. (廣汽長豐汽車股份有限公司),
	a joint stock company incorporated in the PRC on 13 November
	1996, the securities of which have been listed on the Shanghai
	Stock Exchange (Stock Code: 600991) since 14 June 2004

— 2 —

DEFINITIONS

“GC Board”
the board of directors of GC
“GC Shares” ordinary shares in the capital of GC with a nominal value of RMB1.00 each which are listed on the Shanghai Stock Exchange and traded in RMB
“GC Target Shareholders” the shareholders of GC, other than the Company
“Group” the Company and its subsidiaries
“Guangzhou Chime-Long” Guangzhou Chime-Long Group Company Limited (廣州長隆集團有限公司), a company incorporated under PRC law, holding 0.1181% of equity interest in the Company as at the Latest Practicable Date
“Guangzhou Iron & Steel” Guangzhou Iron & Steel Enterprises Group (廣州鋼鐵企業集團有限公司), a company incorporated under PRC law, holding 0.1280% of equity interest in the Company as at the date of this announcement
“H Shares” overseas listed foreign shares in the ordinary share capital of the Company with a nominal value of RMB1.00 each, listed on the Main Board of the Hong Kong Stock Exchange
“HKFRSs” Hong Kong Financial Reporting Standards
“HK Profi t Forecast” the forecast of the consolidated profi t attributable to equity holders of the Company for the year ending 31 December 2011 under HKFRSs
“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited
“Latest Practicable Date” 8 June 2011, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
“Mitsubishi” Mitsubishi Motors Corporation (三菱自動車工業株式會社), a company incorporated in Japan, which holds approximately 14.59% equity interest in GC as at the Latest Practicable Date

“Merger Agreement” the agreement dated 22 March 2011 entered into between the Company and GC in relation to the Proposed Merger

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DEFINITIONS

“Participated Shareholder(s)” the GC Target Shareholder(s) who have elected to receive in whole or in part the A Shares issued by the Company and remain as holders of A Shares at the end of the fi rst trading day of the A Shares on the Shanghai Stock Exchange
“Proposed Merger” the proposed merger of GC with the Company and other ancillary matters set out in this circular
“PRC” the People’s Republic of China (excluding, for the purpose of this circular, the Hong Kong Special Administrative Region of the People’s Republic of China, the Macao Special Administrative Region of the People’s Republic of China and Taiwan)
“PRC Profi t Forecast” the profi t forecast of the Group for the year ending 31 December 2011 prepared by the Directors under CASBE
“Profi t Forecast Announcement” the announcement of the Company dated 22 March 2011 setting out the details of the PRC Profi t Forecast and the HK Profi t Forecast
“RMB” Renminbi, the lawful currency of the PRC
“Share(s)” ordinary share(s) in the capital of the Company with a nominal value of RMB1.00 each, comprising H Shares and Domestic Shares
“Shareholder(s)” holder(s) of the Shares
“Supplemental Merger Agreement” the supplemental agreement dated 10 June 2011 entered into between the Company and GC to amend the terms of the Merger Agreement relating to the Cash Alternative and the Additional Cash Alternative
“SUV” sports utility vehicles

“Wanxiang” Wanxiang Group Corporation (萬向集團公司), a company incorporated under PRC law, one of the promoters of the Company holding 2.5536% equity interest in the Company as at the Latest Practicable Date

“%”

per cent.

for identifi cation purposes only

— 4 —

LETTER FROM THE BOARD

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GUANGZHOU AUTOMOBILE GROUP CO., LTD. 廣州汽車集團股份有限公司

(a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 2238)

Executive Directors: Zhang Fangyou Zeng Qinghong Yuan Zhongrong Lu Sa

Non-executive Directors:

Fu Shoujie Liu Huilian Wei Xiaoqin Li Tun Wang Songlin Li Pingyi

Independent non-executive Directors: Wu Gaogui Ma Guohua Xiang Bing Law Albert Yu Kwan Li Zhengxi

Headquarters: 23/F, Chengyue Building, 448–458 Dong Feng Zhong Road, Yuexiu District, Guangzhou

Registered offi ce and principal place of Business in the PRC: 23/F, Chengyue Building, 448–458 Dong Feng Zhong Road, Yuexiu District, Guangzhou

Principal place of business in Hong Kong: Room 808, Citicorp Centre, 18 Whitfi eld Road, Causeway Bay, Hong Kong

11 June 2011

To the Shareholders

Dear Sir or Madam

(1) DISCLOSEABLE TRANSACTION — PROPOSED A SHARE ISSUE AND THE PROPOSED MERGER AND

(2) PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

Reference is made to the announcement of the Company dated 22 March 2011 in relation to the proposed A Share Issue and the Proposed Merger.

The Board is pleased to announce that, the Company and GC entered into the Merger Agreement in relation to the Proposed Merger on 22 March 2011 and the Supplemental Merger Agreement on 10 June 2011. At the meeting of the Board held on 22 March 2011, the Board also resolved to approve the submission of the application to the relevant regulatory authorities for the allotment and issue of not more

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LETTER FROM THE BOARD

than 470,113,336 A Shares to implement the Proposed Merger, subject to satisfaction of certain conditions including, among others, Shareholders’ approval by way of a special resolution and regulatory approvals.

The Board also resolved to submit to the EGM for consideration and approval by way of an ordinary resolution the delegation of power to the Board, among others, to determine and deal with, at the Board’s discretion and with full authority, the matters in relation to the A Share Issue and the Proposed Merger, to sign or execute all necessary documents, to effect and carry out necessary formalities, and to take all other necessary actions in connection with the A Share Issue and the Proposed Merger, as well as to handle all registration procedures in relation to the amendments to the Articles and the changes in the registered capital of the Company following completion of the A Share Issue and the Proposed Merger.

As at the Latest Practicable Date, the Company is directly interested in 29% of the issued shares of GC.

The implementation of the Proposed Merger will involve an issue of A Shares by the Company at the Exchange Ratio to the GC Target Shareholders.

The purpose of this circular is to provide you with further details of the A Share Issue, the Proposed Merger, the amendments to the Articles and other information as required under the Listing Rules.

A. PROPOSED A SHARE ISSUE AND THE PROPOSED MERGER

1. Structure of the A Share Issue

Type of securities : A Shares to be issued Nominal value : RMB1.00 each Number of A Shares : Not more than 470,113,336 A Shares Target subscribers : All GC Target Shareholders (in the event that GC Target Shareholders holding more than 190,467,173 GC Shares accept the Cash Alternative and elect not to receive the A Shares, in whole or in part, CNMIC and GFIH) Issue price : RMB9.09 per A Share Use of proceeds : All A Shares would be issued to implement the Proposed Merger and the Company will not raise fund from the public by the A Share Issue Retained profi ts : Upon completion of the A Share Issue, the existing Shareholders of the Company prior to the delisting of GC on the Shanghai Stock Exchange and the GC Target Shareholders who elect to receive A Shares will be entitled to share the cumulative undistributed profi ts of the Company and GC as at the date of delisting of GC on the Shanghai Stock Exchange

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LETTER FROM THE BOARD

Place of listing

: The Shanghai Stock Exchange. The Domestic Shares will be converted into A Shares and listed on the Shanghai Stock Exchange and they will rank pari passu in all respects with other A Shares, subject to applicable lock-up requirements

2. Conditions precedent to the A Share Issue

The A Share Issue is subject to:

(i) approval by Shareholders by way of special resolution at the EGM as stipulated by the relevant PRC laws, the rules of the CSRC and the Articles;
(ii) approvals by the CSRC and other relevant regulatory authorities, if necessary; and
(iii) the approval by the Shanghai Stock Exchange as to the listing of and dealings in the A Shares on the Shanghai Stock Exchange.

The EGM will be held on 27 June 2011 to consider and, if thought fi t, to approve the A Share Issue and the Proposed Merger, and to authorize the Board to determine and deal with at its discretion, matters relating to the A Share Issue and the Proposed Merger. It is expected that the A Share Issue and the Proposed Merger will be submitted to the CSRC for approval on or before 30 June 2011. Upon obtaining the approval by CSRC and the approvals or consents from all other relevant regulatory authorities, the Company will complete the A Share Issue and the Proposed Merger as soon as possible.

The approval in respect of the A Share Issue, if obtained from Shareholders in accordance with the relevant PRC laws and regulations (including but not limited to the Company Law, Measures for the Administration of Initial Public Offering and Listing of Stocks and the Mandatory Provisions for the Articles of Association of Companies Listed Oversea) at the EGM, shall be valid for a period of 12 months from the date on which such approval is obtained. In the event that the A Share Issue does not take place during the validity period of such approval, the Company will convene a general meeting to consider and approve the extension of the validity period of the approval for the A Share Issue for another 12 months.

3. Key Terms of the Merger Agreement and the Supplemental Merger Agreement

A summary of the major terms and conditions of the Merger Agreement (as amended and supplemented by the Supplemental Merger Agreement) is as follows:

Date : 22 March 2011 Parties : The Company (as acquirer) GC (as target company) Consideration : The Company will issue A Shares (having the same voting right as the Company’s H Shares) at the Exchange Ratio to the GC Target Shareholders who elect to receive in whole or in part the A Shares as consideration

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LETTER FROM THE BOARD

in exchange for the GC Shares held by them. When there are GC Target Shareholders holding more than 190,467,173 GC Shares accept the Cash Alternative and elect not to receive the A Shares in whole or in part, the Cash Alternative in respect of such GC Shares will be made available by CNMIC and GFIH. The GC Shares (if any) acquired by CNMIC and GFIH will be exchanged for A Shares at the Share Exchange Ratio and the Company will issue A Shares to CNMIC and GFIH as consideration in exchange for the GC Shares held by them.

The Exchange Ratio has been determined as 1.6 A Shares for one GC Share.

The Proposed Merger will be accompanied by the Cash Alternative to the GC Target Shareholders at the price of RMB12.65 per GC Share, subject to the Proposed Merger becoming unconditional.

Number of A Shares to be issued
: As at the date of the Merger Agreement, a total of 369,818,687 GC Shares were held by the GC Target Shareholders. Mitsubishi had undertaken to elect to accept the Cash Alternative in respect of the 75,997,852 GC Shares held by it and the cash consideration of RMB961,372,827.80 for such GC Shares will be paid by the Company. On the basis that the 75,997,852 GC Shares held by Mitsubishi will not be exchanged for A Shares, the maximum number of A Shares to be issued by the Company pursuant to the terms of the Merger Agreement will be 470,113,336.

As the Company understands that the board of directors of Changfeng Group has resolved on 8 June 2011 to elect to accept the Cash Alternative in respect of the 114,469,321 GC Shares held by it, on the assumption that all GC Target Shareholders other than Mitsubishi and Changfeng Group elect to receive A Shares, a maximum of 179,351,514 GC Shares will be exchanged into A Shares and a maximum of 286,962,422 A Shares will be issued by the Company pursuant to the Merger Agreement.

Conditions Precedent : The Merger Agreement is conditional upon:

(i) the approval of the Proposed Merger by way of a special resolution by the Shareholders (other than CNMIC) attending and voting at the EGM having been obtained;
(ii) the approval of the Proposed Merger by way of a special resolution by the independent shareholders of GC attending and voting at such shareholders’ meeting of GC having been obtained;

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LETTER FROM THE BOARD

(iii) all requisite consents and approvals having been obtained from the relevant governmental and regulatory authorities in the PRC for the Proposed Merger and related matters (including but not limited to the CSRC, the relevant state-owned assets supervision and administration department and related ministry of commerce);
(iv) the representations, warranties and undertakings of the parties to the Merger Agreement being true and accurate in all material aspects as at the date of the Merger Agreement and the date of fulfi lment of all conditions precedent to the Merger Agreement; and
(v) the absence of laws, regulations, government or regulatory orders or court judgments restricting, prohibiting or cancelling the Proposed Merger.
Completion : Completion shall take place on the later date of (i) the Company having completed the registration with the AIC in relation to the Proposed Merger, and (ii) GC having completed the deregistration with the AIC.
Profi t Distribution : The Company and GC have agreed that, unless the Proposed Merger is terminated, during the year 2011 and prior to the delisting of GC on the Shanghai Stock Exchange, save for the profi t distribution for the year 2010 announced by the Company and GC on or prior to the date of the Merger Agreement and approved by the shareholders at the respective general meeting of the Company and GC, no profi t distribution in any form would be announced or carried out by the Company and GC.

Subsequent to the signing of the Merger Agreement, the Company and GC agreed to include GFIH as a provider of Cash Alternative and Additional Cash Alternative. To amend the relevant terms in the Merger Agreement, the Company and GC entered into the Supplemental Merger Agreement on 10 June 2011 to include GFIH as a Cash Alternative Provider and an Additional Cash Alternative Provider. Save for the amendments specifi ed in the Supplemental Merger Agreement, the terms, provisions and conditions of the Merger Agreement remained unaltered. The Supplemental Merger Agreement together with the Merger Agreement constituted the entire agreement between the Company and GC with regard to the Proposed Merger.

Please refer to paragraphs 5 and 6 of this section for further details on the Cash Alternative and the Additional Cash Alternative pursuant to the Merger Agreement as amended and supplemented by the Supplemental Merger Agreement.

4. The Exchange Ratio

The Exchange Ratio is determined based on the following:

(i) the purchase price of the GC Shares of RMB14.55 per share under the Merger Agreement, representing a premium of approximately 15% over the Average Trading Price per GC Share of RMB12.65 of the 20 trading days prior to 21 March 2011, being the reference date on which the Exchange Ratio is determined; and

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LETTER FROM THE BOARD

(ii) the issue price of the new A Shares of RMB9.09 per share, which is determined based on factors including the valuation of the A-share listed companies comparable to the Company, the potential growth of the Group and the pricing of the H Shares.

Accordingly, the Exchange Ratio was determined to be 1.6:1 whereby the GC Target Shareholders will exchange one GC Share for 1.6 A Shares to be issued by the Company.

Pursuant to the Measures for the Administration of Material Asset Reorganization of Listed Companies promulgated by the CSRC and relevant requirements, the reference date for determining the price of shares of a listed company shall be the date of the board of the listed company resolving to approve the proposed material asset reorganization. The GC Board resolved to enter into the Merger Agreement in relation to the Proposed Merger on 21 March 2011, which was taken to be the reference date for determining the Exchange Ratio.

The number of A Shares to be received by the GC Target Shareholders who have elected to receive A Shares wholly or partly in exchange for GC Shares held by them shall be integral. If the exchange of GC Shares at the Exchange Ratio results in fractional number of A Shares, every holder of such fractional A Shares will be allotted one A Share in accordance with the descending order of the size of the fractional entitlement, until the total number of A Shares actually issued at completion equals the number of A Shares proposed to be issued. In the event of the same size of fractional entitlement, the order of allotment of A Shares will be determined randomly by computer, until the total number of A Shares actually issued at completion equals the number of A Shares proposed to be issued.

The Exchange Ratio and the premium was determined based on arm’s length negotiations by the Directors, having made due and reasonable inquiries and taking into account various principal considerations and factors.

5. The Cash Alternative

The Proposed Merger will be accompanied by the Cash Alternative provided by the Cash Alternative Providers to the GC Target Shareholders at the price of RMB12.65 per GC Share, subject to the Proposed Merger becoming unconditional. The value of the Cash Alternative represents the Average Trading Price of GC Shares of the 20 trading days prior to 21 March 2011, being the reference date on which the Exchange Ratio is determined.

If the GC Target Shareholders accept the Cash Alternative and elect not to receive the A Shares, in whole or in part, the Cash Alternative Providers will pay RMB12.65 per GC Share in cash to such GC Target Shareholders in whole or in part in return for the GC Shares held by such holders. If the GC Target Shareholders do not elect to accept the Cash Alternative, all GC Shares held by such GC Target Shareholders will be exchanged into A Shares at the Exchange Ratio.

The GC Target Shareholders would not be entitled to exercise the Cash Alternative but would only be entitled to elect to receive A Shares in respect of the GC Shares which are (i) subject to encumbrances such as pledge or moratorium or (ii) not entitled to receive the Cash Alternative in accordance with the applicable laws and regulations. The A Shares in exchange for such GC Shares will be subject to the same encumbrances and restrictions, and the holders thereof can only dispose of such A Shares after the release of such encumbrances and restrictions.

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LETTER FROM THE BOARD

As at the date of the Merger Agreement, a total of 369,818,687 GC Shares are held by GC Target Shareholders. The Cash Alternative will be made available by the Company in respect of up to 190,467,173 GC Shares and CNMIC and GFIH will make available the Cash Alternative in respect of the remaining 179,351,514 GC Shares. Pursuant to two letters of undertaking both dated 7 June 2011 respectively executed by CNMIC and GFIH, CNMIC and GFIH have irrevocably undertaken to the Company that upon the successful acceptance of the Cash Alternative by the GC Target Shareholders, CNMIC and GFIH shall unconditionally acquire up to an aggregate of 179,351,514 GC Shares held by the GC Target Shareholders and shall pay such GC Target Shareholders the purchase price of RMB12.65 per GC Share. The obligations of CNMIC and GFIH as Cash Alternative Providers are several. The priority between CNMIC and GFIH in fulfi lling their respective obligation as Cash Alternative Providers and the actual number of GC Shares to be acquired by each of them shall be determined by the Company, so long as such number of GC Shares does not exceed their respective limit stipulated in the letters of undertaking.

In the event that GC Target Shareholders elect to receive the Cash Alternative in respect of not more than 190,467,173 GC Shares, the obligation of CNMIC and GFIH as Cash Alternative Providers will not be triggered and neither CNMIC nor GFIH will acquire any GC Shares or pay any cash consideration. Mitsubishi has undertaken to elect to accept the Cash Alternative in respect of the 75,997,852 GC Shares held by it and the cash consideration for such GC Shares will be paid by the Company. The Company understands that the board of directors of Changfeng Group has resolved on 8 June 2011 to elect to accept the Cash Alternative in respect of the 114,469,321 GC Shares held by it.

The GC Shares acquired by the Company as a Cash Alternative Provider will not be exchanged for the A Shares and, together with the 151,052,703 GC Shares held by the Company as at the date of the Merger Agreement, will be cancelled upon completion of the Proposed Merger. The GC Shares (if any) acquired by CNMIC and GFIH will be exchanged for A Shares at the Exchange Ratio.

On the assumption that GC Target Shareholders holding 190,467,173 GC Shares (being the maximum amount of GC Shares in respect of which the Company will make available the Cash Alternative) elect to accept the Cash Alternative, (i) a maximum of 286,962,422 A Shares, representing approximately 4.46% of the enlarged issued share capital of the Company upon allotment of the A Shares, will be issued by the Company and the total issued share capital of the Company will comprise 6,435,020,097 Shares; and (ii) a maximum of RMB2,409,409,738.45 will be payable by the Company as a Cash Alternative Provider.

6. The Additional Cash Alternative

For the protection of the GC Target Shareholders participating in the exchange of A Shares, the Proposed Merger will further be accompanied by the Additional Cash Alternative to the Participated Shareholders, pursuant to which the Participated Shareholders can transfer the A Shares held by them to the Additional Cash Alternative Providers at the price of RMB9.09 per A Share, provided that the Average Trading Price of the A Shares on its fi rst trading date falls below the issue price of the A Shares of RMB9.09. The investors who purchase A Shares after listing of the A Shares are not entitled to the Additional Cash Alternative in respect of the A Shares purchased.

The Participated Shareholders would not be entitled to exercise the Additional Cash Alternative in respect of the A Shares which are (i) subject to encumbrances such as pledge or moratorium or (ii) not entitled to receive the Additional Cash Alternative in accordance with the applicable laws and regulations. Such A Shares will be subject to the same encumbrances and restrictions, and the holders thereof can only dispose of such A Shares after the release of such encumbrances and restrictions.

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LETTER FROM THE BOARD

Pursuant to two letters of undertaking both dated 7 June 2011 respectively executed by CNMIC and GFIH, CNMIC and GFIH have irrevocably undertaken to the Company that upon the successful acceptance of the Additional Cash Alternative by the Participated Shareholders, CNMIC and GFIH shall unconditionally acquire up to an aggregate of 286,962,422 A Shares held by the Participated Shareholders and shall pay such Participated Shareholders the purchase price of RMB9.09 per A Share. The obligations of CNMIC and GFIH as Additional Cash Alternative Providers are several. The priority between CNMIC and GFIH in fulfi lling their respective obligation as Additional Cash Alternative Providers and the actual number of A Shares to be acquired by each of them shall be determined by the Company, so long as such number of A Shares does not exceed their respective limit stipulated in the letters of undertaking.

On the assumption that no GC Target Shareholder other than Mitsubishi (holding 75,997,852 GC Shares) and Changfeng Group (holding 114,469,321 GC Shares) elects to receive the Cash Alternative and all Participated Shareholders elect to accept the Additional Cash Alternative, a maximum of 286,962,422 A Shares will be transferred to CNMIC and GFIH at the price of RMB9.09 per A Share and a maximum of RMB2,608,488,415.98 will be payable by CNMIC and GFIH.

7. Exit rights of Dissenting Shareholders of the Company

(i) Entitlement to the exit rights of Dissenting Shareholders

Pursuant to the Articles, the Shareholders who attend the EGM in person or by proxy and have voted against the Proposed Merger at the EGM would have the right to demand the acquisition of their Shares by the Company or the Assenting Shareholders at fair prices to be determined by the parties to the acquisition by negotiation. The exercise of such exit rights will be subject to the Proposed Merger becoming unconditional. In the event that the Proposed Merger is not approved at the EGM or the general meeting of GC or the relevant government authorities such that the Proposed Merger is not implemented, the Dissenting Shareholders of the Company would not be entitled to exercise the exit rights.

The Dissenting Shareholders would not be entitled to such exit rights in respect of the Shares which are subject to encumbrances or legal restrictions.

A copy of the Articles of the Company is available for downloading from the Cyber Search Centre of the Integrated Companies Registry Information System operated by the Hong Kong Companies Registry (at http://www.icris.cr.gov.hk/) upon payment of the applicable search fees.

(ii) Exercise of the exit rights of Dissenting Shareholders

Dissenting Shareholders shall make a clear written request at the EGM to request the Company or the Assenting Shareholders to acquire the Shares held by the Dissenting Shareholders at fair prices, the content of which shall be clear, unambiguous and shall be properly and effectively signed by the Dissenting Shareholders.

If Dissenting Shareholders elect to request the Company to acquire their Shares at fair prices, the Company will fully comply with the laws, regulations and applicable rules (including the Listing Rules) concerning the Company’s repurchase of Shares. The Company will be entitled to designate any third parties to acquire the Shares to be disposed of upon the request of such Dissenting Shareholders at fair prices to be determined by the parties to the acquisition.

— 12 —

LETTER FROM THE BOARD

Subject to the Merger Agreement becoming unconditional, the Company (or its designated third parties) or the Assenting Shareholders shall pay and complete the clearing and settlement procedures in respect of the Shares of which the exit rights of Dissenting Shareholders of the Company have been exercised in accordance with the terms of the acquisition agreements to be entered into by the Dissenting Shareholders. The timing and manner for the payment of consideration for the acquisition of Shares from the Dissenting Shareholders and the obligation to pay stamp duty and other costs relating to the sale of Shares by the Dissenting Shareholders will be governed by the actual terms of the acquisition agreements to be entered into by the Dissenting Shareholders.

8. Arrangements of GC during the Interim Period

During the period between the date of the Merger Agreement and the completion of the Proposed Merger (“ Interim Period ”), the Company and GC shall actively cooperate at the request of each other to ensure a smooth transition of operation, while both parties shall continue with the usual business practice and mode of operation.

During the Interim Period, unless with the prior written consent of the Company, GC shall not issue any securities (including but not limited to stocks, bonds, bonds which are convertible into shares and so on).

During the Interim Period, GC (and the major subsidiaries of GC) shall notify the Company upon the occurrence of the following and shall not, unless with the prior written consent of the Company:

(i) provide any guarantee, or create any mortgage or pledge or other third party rights over its assets other than pursuant to the needs of normal business operation or requirements of laws and regulations;
(ii) undertake or assume on behalf of other parties any debt(s) of substantial amount, other than pursuant to the needs of normal business operation or requirements of laws and regulations;
(iii) waive any substantial rights, make any gift of properties or waive any substantial debt(s);
(iv) carry out any major asset transfer, acquisition, merger, replacement, purchase or investment activities other than pursuant to the needs of normal business operation or requirements of laws and regulations;
(v) enter into, modify or terminate any major contracts which are not required for normal business operation, except otherwise expressly stipulated in such contracts.

During the Interim Period, the Company shall not, by way of transfer, pledge or otherwise dispose of the GC Shares held. Save for the transactions pursuant to the Merger Agreement, the Company shall procure its controlling shareholder and other companies controlled by its controlling shareholder not to otherwise acquire or purchase GC Shares.

— 13 —

LETTER FROM THE BOARD

9. Effect of the Proposed Merger

Upon successful implementation of the Proposed Merger, the GC Shares held by the GC Target Shareholders on a record date to be determined will be exchanged into the A Shares of the Company. All such GC Shares (together with the 151,052,703 GC Shares held by the Company) will be cancelled. As a result of and upon completion of the Proposed Merger, the assets of GC will be absorbed into and the liabilities of GC will be assumed by the Company. GC will then cease to exist.

Subject to the approval of the CSRC and the Shanghai Stock Exchange, the A Shares will be listed on the Shanghai Stock Exchange. The H Shares will continue to be listed on the Hong Kong Stock Exchange. Set out below is the shareholding structure of the Company (1) as at the Latest Practicable Date, and (2) immediately after successful completion of the A Share Issue and the Proposed Merger assuming (i) an aggregate of 286,962,422 A Shares will be issued under the A Share Issue and (ii) GC Target Shareholders holding 190,467,173 GC Shares elect to receive the Cash Alternative.

				Immediately after
				completion of
				the A Share Issue and
				the Proposed
				Merger assuming
				GC Target Shareholders
				holding 190,467,173
				GC Shares elect to receive
				the Cash Alternative and
		As at the date	of	not to receive A Shares
		the Latest Practicable Date		*(Notes 1 & 2)*
		*Number of Shares*	%	*Number of Shares* %
(1) Domestic Shares (Note 3)		3,934,757,457	64.00	3,934,757,457 61.14
(a)	Held by GAIG	3,617,403,529	58.84	3,617,403,529 56.21
(b)	Held by other holders	317,353,928	5.16	317,353,928 4.93
(2) A Shares		—	—	286,962,422 4.46
(3) H Shares		2,213,300,218	36.00	2,213,300,218 34.39
Total Number of Shares		6,148,057,675	100.00	6,435,020,097 100.00

Note 1: This column also demonstrates the shareholding structure of the Company immediately after successful completion of the A Share Issue and the Proposed Merger in the event that all GC Target Shareholders elect to receive the Cash Alternative and 179,351,514 GC Shares will be acquired by the Cash Alternative Providers other than the Company, as all GC Shares (if any) acquired by CNMIC and GFIH will be exchanged for A Shares at the Exchange Ratio.

Note 2: The total percentage does not add up to 100% due to rounding off of percentage fi gures to two decimal places.

Note 3: Upon completion of the A Share Issue and the Proposed Merger, the Domestic Shares will be converted into A Shares and listed on the Shanghai Stock Exchange, and will rank pari passu in all respects with the other A Shares, subject to applicable lock-up requirements.

10. Lock-up requirements

GAIG, the controlling shareholder of the Company, has undertaken that, within 36 months upon listing of the A Shares on the Shanghai Stock Exchange, it will not transfer nor entrust any party to manage any of the Shares issued by the Company prior to the A Share Issue directly or indirectly held by it, and will not allow the Company to repurchase such Shares.

— 14 —

LETTER FROM THE BOARD

Each of the other holders of the Domestic Shares (namely Wanxiang, CNMIC, Guangzhou Iron & Steel and Guangzhou Chime-Long) has also undertaken that, with 12 months upon listing of the A Shares on the Shanghai Stock Exchange, it will not transfer nor entrust any party to manage any of the Shares issued by the Company prior to the A Share Issue directly or indirectly held by it, and will not allow the Company to repurchase such Shares.

Save for the lock-up requirements applicable to GAIG and other holders of the Domestic Shares, there are no other lock-up requirements restricting the transfer of A Shares by the holders of A Shares.

11. Information on GC, the Company and GAIG

GC is a joint stock company established under the laws of the PRC with limited liability, the securities of which have been listed on the Shanghai Stock Exchange (Stock Code: 600991) since 14 June 2004. GC and its subsidiaries are principally engaged in, among others, the manufacturing and sale of automobiles and auto parts. The major automobile product of GC is SUV, including Liebao and Pajero.

The audited consolidated net asset value of GC and its subsidiaries as at 31 December 2010 was RMB2,429,524,942.52. The audited consolidated accounts of GC and its subsidiaries for the two years ended 31 December 2010 prepared under CASBE recorded an audited consolidated profi t (before taxation and extraordinary items) of RMB41,030,944.02 and RMB173,412,173.58, respectively, and an audited consolidated profi t (after taxation and extraordinary items) of RMB30,188,090.52 and RMB147,642,906.88, respectively.

Pursuant to the fi nancial statements of GC audited by Pan-China Certifi ed Public Accountants Limited in accordance with CASBE, as at 31 December 2010: the total assets of GC amounted to RMB6,311,270,452.09, comprising fi xed assets and construction in progress, notes receivable, inventories, cash and cash equivalents and accounts receivable; and the total liabilities of GC amounted to RMB3,831,764,966.68, comprising long-term and short-term bank loans, accounts payable and notes payable.

The Company is a joint stock company established under the laws of the PRC with limited liability, the H Shares of which are listed on the Main Board of the Stock Exchange since 30 August 2010. The Group is principally engaged in the research and development, manufacture and sale of passenger vehicles, commercial vehicles, engines and auto parts. The Company is one of the leading automobile manufacturers of the PRC and also the largest automobile manufacturer in the Southern China region.

GAIG is a state-owned enterprise established under the laws of PRC on 18 October 2000. GAIG is principally engaged in, among others, manufacture of automobiles and the operation and management of state-owned assets.

12. Reasons for and benefi ts of the A Share Issue and the Proposed Merger

To answer to the PRC national policy for the restructuring of the automobile industry, the Company has been undergoing a series of acquisitions and restructuring since the second half of 2009. GC is currently held by approximately 14.59% by Mitsubishi and approximately 29% by the Company. The PRC automobile market is now in a fast growing and rapid changing state. Upon completion of the Proposed Merger, all assets and operations of GC will be wholly-owned by the Company, on the basis of which the Company intends to establish a new joint venture to be held as to 50% by each of the Company and Mitsubishi (the “New Joint Venture”) as soon as possible. The New

— 15 —

LETTER FROM THE BOARD

Joint Venture will strengthen the co-operation of the Group and Mitsubishi through the introduction of new models and technology of Mitsubishi, so as to optimize the product portfolio of the Group, and hence enhancing the competitiveness of the Group in the domestic automobile market, in particular the SUV sector and accelerate the attainment of the Company’s strategic goals.

Currently GC focuses on the production of SUV and the research and development of passenger vehicles, and GC may launch its own proprietary brand passenger vehicle in an appropriate stage. GAC Toyota Motor Co., Ltd., a jointly-controlled entity held by the Group, has launched the citymode SUV Highlander and also focuses on the production of passenger vehicles. In the long run, potential competition exists between GC and the Group. After the completion of the Proposed Merger, the potential competition between GC and the Group will also be completely resolved.

The Directors consider that the terms of the Merger Agreement and the Supplemental Merger Agreement were arrived at after arms’ length negotiations between the parties involved and the A Share Issue and the Proposed Merger were entered into in the ordinary and usual course of business of the Group. The Directors are of the view that the A Share Issue and the Proposed Merger are on normal commercial terms, which are fair and reasonable and are in the best interest of the Group and the shareholders of the Company as a whole.

Zhang Fangyou, Zeng Qinghong and Fu Shoujie, being common directors of the Company and GC, and Wang Songlin, being director nominated by CNMIC, had abstained from voting on the relevant Board resolutions approving the Proposed Merger, the Merger Agreement and the Supplemental Merger Agreement.

13. Listing Rules Implications

As all of the applicable percentage ratios in respect of the A Share Issue and the Proposed Merger are more than 5% but are less than 25%, the A Share Issue and the Proposed Merger, if implemented, will constitute a discloseable transaction of the Company under the Listing Rules. As at the Latest Practicable Date, to the best of the knowledge, information and belief of the Directors having made all reasonable enquiry, none of the GC Target Shareholders or party to the Proposed Merger is a connected person of the Company.

Investors are cautioned that the A Share Issue is subject to (i) approval from Shareholders by way of a special resolution in the EGM as required under the PRC laws and regulations; and (ii) approvals from the CSRC and other relevant approval authorities. The Merger Agreement may or may not proceed or become unconditional or effective. There is no assurance that all the conditions precedent contained in the Merger Agreement can be satisfi ed. Investors and potential investors in Shares of the Company should exercise care, and they should only rely on information published by the Company, when they deal, or contemplate dealing, in the H Shares or other securities of the Company.

B. PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

To accommodate the A Share Issue, the Board has proposed to make certain amendments to the Articles in compliance with all relevant and applicable PRC legal and regulatory requirements. Such amendments are proposed in accordance with laws and regulations prescribed by the relevant PRC authorities including the CSRC, stipulating provisions mandatory or recommended for inclusion in articles of association of A share listed companies.

— 16 —

LETTER FROM THE BOARD

The proposed amendments deal with matters relating to a number of areas, including, among others, (i) shares and registered capital; (ii) fi nancial statements; and (iii) dividends or distribution. The amendments relating to the increase in registered capital and the additional disclosure of quarterly fi nancial statements are required under the Guideline on Articles of Association of Listed Companies and the amendment relating to interim dividends facilitates the distribution of interim dividends of the Company. The above amendments of the Articles will enhance the Shareholders’ understanding of the information of the Company and their judgment of the value of the Company.

Under the Listing Rules, listed issuers are permitted, to the extent permitted under the applicable laws and regulations and their own constitutional documents and where the listed issuers have made adequate arrangements to ascertain the wish of their shareholders, to send or otherwise make available corporate communications (as defi ned in the Listing Rules) to their shareholders by using electronic means and in electronic format. In view of the above, the Board proposes to amend the Articles to the extent permissible under the PRC laws, rules and regulations, by permitting the distribution of corporate communication (as defi ned in the Listing Rules) of the Company to the Shareholders by electronic means and in electronic format.

Pursuant to the Articles of the Company, the Company shall send notices of general meetings to holders of overseas listed foreign shares whose registered addresses as shown in the register of members are in Hong Kong, such that they may have suffi cient time to exercise their rights or to act in accordance with the terms of the notice. It has been the practice of the Company to send notices of general meetings to holders of overseas listed foreign shares whose registered addresses are outside Hong Kong. With the proposed amendment to the Articles that the Company may send or despatch notices of general meetings to holders of overseas listed foreign shares through the Company’s website or electronically, holders of overseas listed foreign shares whose registered addresses are outside Hong Kong would also be notifi ed.

The proposed amended Articles, subject to Shareholders’ approval by way of a special resolution at the EGM and the approval of the Shanghai Stock Exchange, will be adopted for use by the Company upon listing of the A Shares.

A resolution will be proposed at the EGM to authorize the Board and any of its executive directors to, among others, further revise and modify the Articles in accordance with the comments or responses from the relevant regulatory authorities and the actual situation of the Company. Therefore, if the CSRC or other PRC regulatory authorities request to revise the proposed amendment to the Articles, the Board or any of its executive directors may amend and fi nalize the Articles in accordance with such request.

C. PROFIT FORECASTS

1.

Reference is made to the announcement of the Company dated 22 March 2011 in relation to, among others, the PRC Profi t Forecast.

In compliance with PRC laws and regulations and pursuant to the requirements of the CSRC, the Directors have prepared the PRC Profi t Forecast for the year ending 31 December 2011 under CASBE, which was reviewed and approved by the Board on 22 March 2011. The PRC Profi t Forecast has been disclosed by GC in the Shanghai Stock Exchange on 22 March 2011. To ensure equal dissemination of unpublished price sensitive information in different stock exchange markets, the Company has disclosed the details of the PRC Profi t Forecast by way of the announcement of the Company dated 22 March 2011. The PRC Profi t Forecast extracted from the relevant sections of the announcement of the Company dated 22 March 2011 are set out in Appendix I to this circular.

— 17 —

LETTER FROM THE BOARD

The PRC Profi t Forecast is prepared based on the assumptions and estimations made by the Directors for illustrative purposes only and does not provide any assurance or indication that any event will take place in the future and may not give a true picture of the results of the Group for the year ending 31 December 2011.

The PRC Profi t Forecast was prepared based on the principal assumptions as set out in Appendix I, one of which being the assumption that there will be no interruption of operations that will adversely affect the Group as a result of a shortage in supply of raw materials and imported parts, which are beyond management’s control and the Company does not expect any material impact on the supply of imported parts due to recent earthquake in Japan up to the date of the Profi t Forecast Announcement. As at the Latest Practicable Date, the key auto part suppliers of the Company are in the process of assessing the impact of the earthquake on their production facilities in Japan and the Company is not aware of any material adverse impact on the supply of imported parts due to the earthquake in Japan. As the supply of raw materials and auto parts utilized by the Group in the production of major models of vehicles are highly localized, the Board is of the view that the recent earthquake in Japan would not bring about interruption of operations that will adversely affect the Group.

BDO China Guang Dong Shu Lun Pan Certifi ed Public Accountants (立信羊城會計師事務所有限公司), the domestic statutory auditor of the Company, has confi rmed that nothing has come to their attention that causes them to believe the assumptions do not give reasonable bases for the PRC Profi t Forecast and in their opinion, the PRC Profi t Forecast has been properly compiled in accordance with the assumptions and presented in accordance with the basis of preparation stated therein.

As the PRC Profi t Forecast was not the sole factor considered by the Board in determining the consideration for the A Share Issue and the Proposed Merger, the Shareholders and potential investors in H Shares should not rely on the information in the PRC Profi t Forecast when they assess the merits and demerits of the A Share Issue and the Proposed Merger. The investors and potential investors in H Shares should not rely on information published or disseminated from the PRC when they deal, or contemplate dealing, in the H Shares or other securities of the Company.

2.

Reference is made to the announcement of the Company dated 22 March 2011 in relation to, among others, the HK Profi t Forecast.

The Directors have further prepared the HK Profi t Forecast. The Board forecasted that, based on the bases and assumptions set out in Appendix I to this circular and in the absence of unforeseen circumstances, the consolidated profi t attributable to the equity holders of the Company under HKFRSs for the year ending 31 December 2011 will not be less than RMB4,956 million. The HK Profi t Forecast, together with the letters from PricewaterhouseCoopers and the Board, are set out in Appendix I to this circular.

The HK Profi t Forecast is prepared based on the assumptions and estimations made by the Directors for illustrative purposes only and does not provide any assurance or indication that any event will take place in the future and may not give a true picture of the results of the Group for the year ending 31 December 2011.

— 18 —

LETTER FROM THE BOARD

The HK Profi t Forecast was prepared based on the principal assumptions as set out in Appendix I, one of which being the assumption that there will be no interruption of operations that will adversely affect the Group as a result of a shortage in supply of raw materials and imported parts, which are beyond management’s control and the Company does not expect any material impact on the supply of imported parts due to recent earthquake in Japan up to the date of the Profi t Forecast Announcement. As at the Latest Practicable Date, the key auto part suppliers of the Company are in the process of assessing the impact of the earthquake on their production facilities in Japan and the Company is not aware of any material adverse impact on the supply of imported parts due to the earthquake in Japan. As the supply of raw materials and auto parts utilized by the Group in the production of major models of vehicles are highly localized, the Board is of the view that the recent earthquake in Japan would not bring about interruption of operations that will adversely affect the Group.

The Directors have confi rmed that they have made the HK Profi t Forecast after due and careful enquiry in compliance with the Listing Rules. PricewaterhouseCoopers, the international auditor of the Company, is of the opinion that, so far as the calculations and accounting policies are concerned, the HK Profi t Forecast has been properly compiled in accordance with the bases and assumptions made by the Directors as set out in the section headed “(2). HK Profi t Forecast” in the announcement of the Company dated 22 March 2011 and is presented on a basis consistent in all material respects with the accounting polices adopted by the Group as set out in the Company’s annual consolidated fi nancial statements prepared in accordance with HKFRSs for the year ended 31 December 2010.

As the HK Profi t Forecast was not the sole factor considered by the Board in determining the consideration for the A Share Issue and the Proposed Merger, the Shareholders and potential investors in H Shares should not rely on the information in the HK Profi t Forecast when they assess the merits and demerits of the A Share Issue and the Proposed Merger.

D. THE EGM

The EGM will be held for the purpose of considering and, if though fi t, approving by the Shareholders (i) the proposed A Share Issue, (ii) the Proposed Merger, the Merger Agreement and the Supplemental Merger Agreement, (iii) the proposed amendments to the Articles, and (iv) the authority to be granted to the Board or the Directors in relation to the A Share Issue and the Proposed Merger.

Save for CNMIC, which as a Cash Alternative Provider shall abstain from voting on the resolutions approving the Proposed Merger, the Merger Agreement and the Supplemental Merger Agreement at the EGM, to the best of the Directors’ knowledge, information and belief after making all reasonable enquiries, no Shareholder is required to abstain from voting on the resolutions to be approved at the EGM.

A notice convening the EGM originally scheduled to be held on Monday, 9 May 2011 immediately after the conclusion of the annual general meeting of the Company, a form of proxy for use at the EGM and a reply slip have been despatched to the Shareholders on 25 March 2011 and are also published on the websites of the Hong Kong Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.gagc.com.cn). As additional time was required for the Company to fi nalize this circular, the EGM was postponed to be held at Island Ballroom C, Level 5, Island Shangri-La Hong Kong, Pacifi c Place, Supreme Court Road, Central, Hong Kong on Monday, 27 June 2011, at 9:30 a.m.. A Supplemental EGM notice has been despatched to the Shareholders on 11 June 2011 and published on the websites of the Hong Kong Stock Exchange and the Company.

— 19 —

LETTER FROM THE BOARD

In order to determine the list of Shareholders who are entitled to attend the EGM originally scheduled to be held on Monday, 9 May 2011, the Company’s register of members had been closed from Saturday, 9 April 2011 to Monday, 9 May 2011, both days inclusive, during which period no transfer of Shares was effected. As required by the Articles of Association of the Company, the record date for determining the list of Shareholders who are entitled to attend the EGM shall not be changed in the event of adjournment of general meetings. Therefore, holders of the Company’s H Shares whose names appear on the Company’s register of members on 9 May 2011 are entitled to attend the EGM. In order to be qualifi ed to attend and vote at the EGM, all transfers of H Shares accompanied by relevant share certifi cates must have been lodged with the Company’s H Share Registrar, Tricor Investor Services Limited, by 4:30 p.m. on Friday, 8 April 2011.

If you have lodged duly completed forms of proxy in accordance with the instructions printed thereon prior to the despatch of this circular, such forms of proxy will remain valid for use at the EGM. If you have not yet lodged a form of proxy for use at the EGM, whether or not you intend to attend the EGM, you are requested to complete and return the form of proxy despatched to you on 25 March 2011 in accordance with the instructions printed thereon not less than 24 hours before the time fi xed for holding the EGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting at the EGM should you so wish.

E. POLL AT GENERAL MEETING

In accordance with the requirement of Rule 13.39(4) of the Listing Rules, all resolutions to be considered, and if thought fi t, to be passed at the EGM, shall be passed by way of poll.

F. RECOMMENDATION

The Board (including the independent non-executive Directors) considers that (i) the proposed A Share Issue; (ii) the Proposed Merger, the Merger Agreement and the Supplemental Merger Agreement; (iii) the proposed amendments to the Articles; and (iv) the authority to be granted to the Board or the Directors in relation to the A Share Issue and the Proposed Merger are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the resolutions as set out in the notice of EGM at the EGM.

G. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

Yours faithfully By order of the Board Guangzhou Automobile Group Co., Ltd. 廣州汽車集團股份有限公司 Zhang Fangyou

Chairman

— 20 —

PROFIT FORECASTS

APPENDIX I

In compliance with PRC laws and regulations and pursuant to the requirements of the CSRC, the Company has disclosed the PRC Profi t Forecast for the year ending 31 December 2011 under CASBE in the Profi t Forecast Announcement dated 22 March 2011. The Company further disclosed the HK Profi t Forecast in the same announcement. Set out below is an extract of the relevant sections of the Profi t Forecast Announcement in relation to the forecast fi gures and the bases and assumptions.

Letters from PricewaterhouseCoopers and the Board in relation to the HK Profi t Forecast are also set out in below.

The Directors have prepared the PRC Profi t Forecast and HK Profi t Forecast which is set out in this Appendix.

— 21 —

PROFIT FORECASTS

APPENDIX I

1. PRC PROFIT FORECAST

PRC Profi t Forecast of the Group Forecasted period: one year ending 31 December 2011

		2010	2011
		(actual)	(forecasted)
		RMB million	RMB million
1.	Total Revenue	59,847.92	78,644.91
	Including: Revenue from Operation	59,847.92	78,644.91
2:	Total Cost of Sales	55,082.78	73,300.18
	Including: cost of sales	45,087.44	58,907.42
	Taxes and surcharges	4,330.36	6,417.25
	Selling and distribution expenses	2,904.89	3,624.02
	General and administrative expenses	2,720.63	4,087.93
	Financial expenses	-33.86	249.22
	Asset impairment losses	73.32	14.34
	Add: Prof t arising from changes in fair value
	(Loss shall be marked by “-”)	—	—
	Investment income
	(Loss shall be marked by “-”)	1,230.17	1,126.33
	Including: Including: Share of prof t of
	associates and joint ventures	1,139.15	1,121.83
2.	Operating prof t (Loss shall be marked by “-”)	5,995.31	6,471.06
	Add: Non-operating income	637.42	357.44
	Less: Non-operating expenses	92.54	139.49
	Including: Losses on disposal of
	non-current assets	6.18	—
3.	Total prof t (Loss shall be marked by “-”)	6,540.19	6,689.01
	Less: Income tax expenses	968.82	1,633.72
4.	Net prof t (Net loss shall be marked by “-”)	5,571.37	5,055.29
	Net prof t attributable to the owner of parent company	4,330.00	5,027.58
	Minority interest	1,241.37	27.71

The PRC Profi t Forecast has been prepared by the Directors cautiously based on information including the operating results of the Group during the years 2008, 2009 and 2010 as audited by the domestic auditors of the Company, BDO China Guang Dong Shu Lun Pan Certifi ed Public Accountants (立信羊城會計師事務所有限公司) together with the Group’s plans for production, operation and sales for the year 2011 and the development trend of the automobile market during the same period.

The accounting policies and accounting estimation methods adopted in preparing the PRC Profi t Forecast were in accordance with the laws and regulations currently in force in the PRC and the Accounting Standards for Business Enterprises issued by the Ministry of Finance of the PRC in 2006, and are consistent

— 22 —

PROFIT FORECASTS

APPENDIX I

in all material respects with the accounting policies and accounting estimation methods actually adopted by the Group in preparing the consolidated fi nancial statements of the Group for the year ended 31 December 2010. The PRC Profi t Forecast is prepared based on the following principal assumptions:

(1) There will be no material changes in the existing political, legal, fi scal, market or economic conditions in the PRC, Hong Kong or any other countries or territories in which the Group currently operates or which are otherwise material to our business;
(2) There will be no changes in legislation, regulations or rules in the PRC, Hong Kong or any other countries or territories in which the Group operates or with which the Group has arrangements or agreements, which may materially and adversely affect the Group’s business or operations;
(3) There will be no material changes in the landscape of the industries in which the Company and the Group operate in and the conditions of the markets in which the Company and the Group sell its products or provide services;
(4) There will be no material delays to the production schedules, operation plans and production expansion plans of the Company and the Group;
(5) There will be no material changes in the cost of raw materials and labour in connection with the automobile industry in the PRC;
(6) There will be no interruption of operations that will adversely affect the Group as a result of a shortage in supply of raw materials and imported parts, which are beyond management’s control. The Company does not expect any material impact on the supply of imported parts due to recent earthquake in Japan up to the date of the Profi t Forecast Announcement;
(7) There will be no material changes in infl ation rates, interest rates, or foreign exchange rates from those currently prevailing in the context of the Group’s operations;
(8) There will be no material changes in the taxation system and relevant tax bases or tax rates or duties applied to the Company and the Group in the PRC, Hong Kong or any of the countries or territories in which the Company and the Group operate;
(9) The operations of the Company and the Group will not be materially affected or interrupted by any force majeure events or unforeseeable factors or any unforeseeable reasons that are beyond the control of the Directors;
(10) The weighted average unit selling prices of each product category, after taking into account sales discount and sales rebate, offered by the Group in the ordinary course, will not deviate materially from those of 2010;
(11) The Company assumes that the Proposed Merger will be completed in a certain date within year 2011 (30 June 2011) and the Company’s interest in GC will be increased to 100% afterwards. The consolidated profi t attributable to the Company’s shareholders is forecasted based on the above assumption. Meanwhile, the Company does not foresee any signifi cant gain or loss upon completion of the Proposed Merger for the year ending 31 December 2011;
(12) There will be no signifi cant changes in the Group’s existing structure and interests in major subsidiaries, jointly controlled entities and associates except for the Proposed Merger for the year ending 31 December 2011.

— 23 —

PROFIT FORECASTS

APPENDIX I

2. HK PROFIT FORECAST

The Directors have further prepared the HK Profi t Forecast. The Board forecasted that, based on the bases and assumptions set out below and in the absence of unforeseen circumstances, the consolidated profi t attributable to the equity holders of the Company under HKFRSs for the year ending 31 December 2011 will not be less than RMB4,956 million.

Bases and principal assumptions

The HK Profi t Forecast for which the Directors of the Company are solely responsible, has been prepared by them based on the unaudited management accounts of the Group for the two months ended 28 February 2011 and the forecast of the consolidated results for the remaining ten months ending 31 December 2011.

The HK Profi t Forecast has been prepared on a basis consistent in all material respects with the accounting policies presently adopted by the Group as set out in the annual consolidated fi nancial statements of the Group in accordance with HKFRSs for the year ended 31 December 2010. Principal assumptions on which the HK Profi t Forecast is based on are as follows:

(1) There will be no material changes in the existing political, legal, fi scal, market or economic conditions in the PRC, Hong Kong or any other countries or territories in which the Group currently operates or which are otherwise material to our business;
(2) There will be no changes in legislation, regulations or rules in the PRC, Hong Kong or any other countries or territories in which the Group operates or with which the Group has arrangements or agreements, which may materially and adversely affect the Group’s business or operations;
(3) There will be no material changes in the landscape of the industries in which the Company and the Group operate in and the conditions of the markets in which the Company and the Group sell its products or provide services;
(4) There will be no material delays to the production schedules, operation plans and production expansion plans of the Company and the Group;
(5) There will be no material changes in the cost of raw materials and labour in connection with the automobile industry in the PRC;
(6) There will be no interruption of operations that will adversely affect the Group as a result of a shortage in supply of raw materials and imported parts, which are beyond management’s control. The Company does not expect any material impact on the supply of imported parts due to recent earthquake in Japan up to the date of the Profi t Forecast Announcement;
(7) There will be no material changes in infl ation rates, interest rates, or foreign exchange rates from those currently prevailing in the context of the Group’s operations;
(8) There will be no material changes in the taxation system and relevant tax bases or tax rates or duties applied to the Company and the Group in the PRC, Hong Kong or any of the countries or territories in which the Company and the Group operate;

— 24 —

PROFIT FORECASTS

APPENDIX I

(9) The operations of the Company and the Group will not be materially affected or interrupted by any force majeure events or unforeseeable factors or any unforeseeable reasons that are beyond the control of the Directors;
(10) The weighted average unit selling prices of each product category, after taking into account sales discount and sales rebate, offered by the Group in the ordinary course, will not deviate materially from those of 2010;
(11) The Company assumes that the Proposed Merger will be completed in a certain date within year 2011 (30 June 2011) and the Company’s interest in GC will be increased to 100% afterwards. The consolidated profi t attributable to the Company’s shareholders is forecasted based on the above assumption. Meanwhile, the Company does not foresee any signifi cant gain or loss upon completion of the Proposed Merger for the year ending 31 December 2011;
(12) There will be no signifi cant changes in the Group’s existing structure and interests in major subsidiaries, jointly controlled entities and associates except for the Proposed Merger for the year ending 31 December 2011.

— 25 —

PROFIT FORECASTS

APPENDIX I

3. LETTER FROM PRICEWATERHOUSECOOPERS

22 March 2011

The Directors

Guangzhou Automobile Group Company Limited

Dear Sirs,

We have reviewed the calculations of and accounting policies adopted in arriving at the forecast of the consolidated profi t attributable to equity holders of Guangzhou Automobile Group Company Limited (the “Company”) for the year ending 31 December 2011 (the “Profi t Forecast”) as set out in the section headed “2. HK Profi t Forecast” in the announcement of the Company dated 22 March 2011 (the “Announcement”).

We conducted our work in accordance with Auditing Guideline 3.341 on “Accountants’ report on profi t forecasts” issued by the Hong Kong Institute of Certifi ed Public Accountants.

The Profi t Forecast, for which the directors of the Company are solely responsible, has been prepared by them based on the unaudited consolidated results of the Company and its subsidiaries (hereinafter collectively referred to as “the Group”) based on management accounts for the two months ended 28 February 2011 and a forecast of the consolidated results of the Group for the remaining ten months ending 31 December 2011.

In our opinion, the Profi t Forecast, so far as the calculations and accounting policies are concerned, has been properly compiled in accordance with the bases and assumptions made by the directors of the Company as set out in the section headed “2. HK Profi t Forecast” in the Announcement, and is presented on a basis consistent in all material respects with the accounting policies adopted by the Group as set out in the Company’s annual consolidated fi nancial statements prepared in accordance with the Hong Kong Financial Reporting Standards for the year ended 31 December 2010.

Yours faithfully,

PricewaterhouseCoopers

Certifi ed Public Accountants Hong Kong

— 26 —

PROFIT FORECASTS

APPENDIX I

The following is the text of the letter from the Board in connection with the PRC Profi t Forecast and the HK Profi t Forecast for inclusion in this circular.

4. LETTER FROM THE BOARD

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GUANGZHOU AUTOMOBILE GROUP CO., LTD. 廣州汽車集團股份有限公司

(a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 2238)

11 June 2011

To the Shareholders

Dear Sir or Madam,

We refer to the circular of the Company dated 11 June 2011 (the “ Circular ”), of which this letter forms part. Unless the context otherwise requires, terms defi ned in the Circular shall have the same meanings when used herein.

We hereby confi rm that the Board has made the PRC Profi t Forecast and the HK Profi t Forecast, for which the Directors are solely responsible, after due and careful enquiry.

Yours faithfully

For and on behalf of the Board of Guangzhou Automobile Group Co., Ltd. 廣州汽車集團股份有限公司 Zhang Fangyou Chairman

— 27 —

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AFTER LISTING AND ISSUE OF A SHARES

APPENDIX II

The proposed amendments to the Articles to be adopted for use after issue and listing of A Shares are set out below:

The Company proposed to make the following amendments to the Articles:

The existing Article 20, which reads:

Subsequent to changing into a joint stock company with limited liability from Guangzhou Automobile Co., Ltd., the Company issued 2,648,392,120 ordinary shares, including 2,213,300,218 overseas listed foreign shares, representing 43.08% of the total number of ordinary shares of the Company.

Prior to the initial public offering of the shares of the Company, the shareholding of the promoters in the Company were as follows:

		Percentage of
	Number of	the total number
Names of Promoters	Shareholding	of shares
Guangzhou Automobile Industry Group Co., Ltd.	3,617,403,529	91.9346%
Wanxiang Group Corporation	156,996,823	3.99%
China National Machinery Industry Corporation	145,227,963	3.6909%
Guangzhou Iron & Steel Enterprises Group	7,869,515	0.2%
Guangzhou Chime-Long Hotel Co. Ltd.	7,259,627	0.1845%

Subsequent to the initial public offering, the share capital structure of the Company was as follows: 6,148,057,675 ordinary shares, of which 3,934,757,457 domestic shares were held by the promoters, representing 64% of the entire share capital of the Company; 2,213,300,218 shares were held by shareholders of overseas listed foreign shares, representing 36% of the entire share capital of the Company.

Is to be amended to:

— 28 —

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AFTER LISTING AND ISSUE OF A SHARES

APPENDIX II

Prior to the initial public offering of H Shares of the Company, the shareholding of the promoters of the Company were as follows:

		Percentage of
	Number of	the total number
Names of Promoters	Shareholding	of shares
Guangzhou Automobile Industry Group Co., Ltd.	3,617,403,529	91.9346%
Wanxiang Group Corporation	156,996,823	3.99%
China National Machinery Industry Corporation	145,227,963	3.6909%
Guangzhou Iron & Steel Enterprises Group	7,869,515	0.2%
Guangzhou Chime-Long Hotel Co. Ltd.	7,259,627	0.1845%

Subsequent to the initial public offering of H Shares, the share capital structure of the Company were as follows: 6,148,057,675 ordinary shares, of which 3,934,757,457 domestic shares were held by the promoters, representing 64% of the entire share capital of the Company; 2,213,300,218 shares were held by shareholders of overseas listed foreign shares, representing 36% of the entire share capital of the Company.

The initial public offering of [•] RMB-denominated ordinary shares to the domestic public on [•] by the Company was approved by China Securities Regulatory Commission on [•], and such shares were listed on the Shanghai Stock Exchange on [•].

Subsequent to the increase in capital by issuing shares to the domestic public referred to in the preceding paragraph, the share capital structure of the Company were as follows: [•] ordinary shares, of which [•] shares are held by the promoters, [•] shares are held by holders of domestic shares and 2,213,300,218 shares are held by holders of H Shares, representing [•]%, [•]% and [•]% of the total number of ordinary shares, respectively.

The existing Article 23, which reads:

The Company’s registered capital is RMB6,148,057,675.

Is to be amended to:

The Company’s registered capital is RMB6,148,057,675. Subsequent to the increase in share capital by issuing shares to the domestic public referred to in Article 20, the Company’s registered capital is RMB[•].

The existing Article 72, which reads:

The notice of the general meeting shall be served on all shareholders (whether or not such shareholder is entitled to vote at the general meeting) by personal delivery or by pre-paid mail. The address of the recipient shall be the registered address as shown in the register of members. For holders of domestic shares, the notice of the general meeting may be given by way of announcement.

— 29 —

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AFTER LISTING AND ISSUE OF A SHARES

APPENDIX II

The announcement as mentioned above shall be published in one or more newspapers designated by the securities authority of the State Council within the interval between 45 days and 50 days prior to the date of the meeting; all holders of the domestic shares shall be deemed to have received the notice of the relevant general meeting upon the publication of announcement.

The Company shall issue a notice, so that holders of overseas listed foreign shares whose registered addresses are in Hong Kong may have suffi cient time to exercise their rights or to act in accordance with the terms of the notice.

After the notice of the general meeting is dispatched, the Board shall not change the time of the general meeting unless due to force majeure or other accidental events, etc.. If the time of the general meeting is required to be changed due to force majeure, the shareholding record date shall not be altered.

Is to be amended to:

The notice of the general meeting shall be served on all shareholders (whether or not such shareholder is entitled to vote at the general meeting) by personal delivery or by pre-paid mail. The address of the recipient shall be the registered address as shown in the register of members. For holders of domestic shares, the notice of shareholders’ general meeting may be published by way of an announcement.

The announcement as mentioned above shall be published in one or more newspapers designated by the securities authority of the State Council within the interval between 45 days and 50 days prior to the date of the meeting; all holders of domestic shares shall be deemed to have received notice of the relevant general meeting upon the publication of announcement.

Without violating the laws and regulations or listing rules of the places where the shares of the Company are listed, the Company may also send or dispatch the aforesaid notices of general meeting to the holders of overseas listed foreign shares through the Company’s website or electronically, instead of sending or dispatching the same in the manner prescribed in the preceding two paragraphs of this article and Article 68 of the Articles.

After the notice of the shareholders’ general meeting is dispatched, the Board shall not change the time of the general meeting, unless due to force majeure or other accidental events, etc.. If the time of the general meeting is required to be changed due to force majeure, the shareholding record date shall not be altered.

The existing Article 205, which reads:

The Company shall publish two fi nancial reports for each fi nancial year, namely to issue an interim fi nancial report within 60 days after the end of the fi rst six months of a fi nancial year, and to issue an annual fi nancial report within 120 days after the end of a fi nancial year.

— 30 —

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AFTER LISTING AND ISSUE OF A SHARES

APPENDIX II

The fi nancial reports mentioned above shall be prepared in accordance with relevant laws, administrative rules and regulations.

Is to be amended to:

The Company shall submit an annual fi nancial report to the CSRC and the Stock Exchange within 4 months from the date of the end of each fi nancial year; and shall submit a half-year fi nancial report to the agency of the CSRC and the Stock Exchange within 2 months from the date of the end of the fi rst six months of each fi nancial year; and shall submit a quarterly fi nancial report to the agency of the CSRC and the Stock Exchange within one month from the date of the end of fi rst three months and fi rst nine months of each fi nancial year respectively.

The fi nancial reports mentioned above shall be prepared in accordance with relevant laws, administrative rules and regulations.

The existing Article 207, which reads:

The Company shall deposit its fi nancial reports at the Company for inspection by the shareholders at least 20 days before the convening of the annual general meeting. Each shareholder of the company is entitled to obtain the fi nancial reports mentioned in this chapter.

The Company shall send the balance sheet (including documents to be annexed as required by the laws), income statement or income and expenditure statement and fi nancial summary report, together with the report of the board of directors to each holder of overseas listed foreign shares by pre-paid mail at least 21 days before the convening of the annual general meeting. The address of the recipient shall be the registered address as shown on the register of members.

Is to be amended to:

The Company shall deposit its fi nancial reports at the Company for inspection by the shareholders at least 20 days before the convening of the annual general meeting of shareholders. Each shareholder of the company is entitled to obtain fi nancial reports mentioned in this chapter.

The Company shall send the balance sheet (including documents to be annexed as required by the laws), income statement or income and expenditure statement and fi nancial summary report, together with the report of the board of directors to each holder of overseas listed foreign hares by prepaid mail at least 21 days before the convening of the annual general meeting of shareholders. The address of the recipient shall be the registered address as shown on the register of members.

Without violating the laws and regulations or listing rules of the places where the shares of the Company are listed, the Company may also send or dispatch the aforesaid reports to each holder of overseas listed foreign shares through the Company’s website or electronically instead of sending or dispatching the same in the manner prescribed in the preceding paragraph of this article.

The new Article 215, which reads:

Dividend shall be distributed on a pro rata basis proportional to the respective shareholdings of the shareholders.

— 31 —

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AFTER LISTING AND ISSUE OF A SHARES

APPENDIX II

Apart from the distribution of annual dividend, the board of directors may be authorized at a general meeting to distribute interim dividend, unless otherwise resolved by a general meeting of the shareholders. The amount of interim dividend shall not exceed 50% of the interim net profi ts of the Company, unless otherwise required by the laws or administrative regulations. The Company may distribute the interim dividend in cash.

The existing Article 215 to Article 230 shall be renumbered as Article 216 to Article 231 respectively.
The existing Article 231 shall be renumbered as Article 232, and the existing Article 231, which reads:

In dismissing or discontinuing the appointment of an accounting fi rm, the Company shall notify the said accounting fi rm in advance and the said accounting fi rm has the right to make representations to the shareholders at a general meeting. If an accounting fi rm resigns, it shall clarify to the shareholders at a general meeting whether or not there is any improper affair in the Company.

An accounting fi rm may resign from its position by depositing its written notice of resignation at the business premises of the Company. The notice shall take effect from the date of deposit at the business premises of the Company or any later date as specifi ed in such written notice. Such notice shall contain one of following statements:

Declaration that its resignation did not involve any circumstances which should be brought to the attention of the shareholders or creditors of the Company; or a description of such circumstances.

The Company shall send a copy of the written notice specifi ed in the preceding paragraph to the relevant competent authority within 14 days after receiving such notice. If the notice contains the representations referred to in paragraph 2 of Article 230 of the Articles, the Company shall deposit the aforesaid copy at the Company for inspection by the shareholders and send it to each holder of overseas listed foreign shares and each shareholder who is entitled to receiving fi nancial reports of the Company by pre-paid mail. The addresses of addressees shall be those registered in the register of members.

If the resignation notice of an accounting fi rm contains any representations which ought to be brought to the attention of shareholders, the accounting fi rm may request the board of directors to convene an extraordinary general meeting for the explanations regarding its resignation to be heard by the shareholders.

Is to be amended to:

In dismissing or discontinuing the appointment of an accounting fi rm, the Company shall notify the said accounting fi rm in advance and the said accounting fi rm has the right to make representations to the shareholders at a general meeting. If an accounting fi rm resigns from the post, it shall clarify to the shareholders at a general meeting whether or not there is any improper affair in the Company.

An accounting fi rm may resign from its position by depositing its written notice of resignation at the business premises of the Company. The notice shall take effect from the date of deposit at the business premises of the Company or any later date specifi ed in such written notice. Such notice shall contain one of following statements:

Declaration that its resignation did not involve any circumstances which should be brought to the attention of the shareholders or creditors of the Company; or a description of such circumstances.

— 32 —

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AFTER LISTING AND ISSUE OF A SHARES

APPENDIX II

The Company shall send a copy of the written notice specifi ed in the preceding paragraph to the relevant competent authority within 14 days after receiving such notice. If the notice contains the representations referred to in paragraph 2 of Article 232 of the Articles, the Company shall deposit the aforesaid copy at the Company for inspection by the shareholders and send it to each holder of overseas listed foreign shares and each shareholder who is entitled to receiving fi nancial reports of the Company by pre-paid mail. The addresses of addressees shall be those registered in the register of members.

Without violating the laws and regulations or listing rules of the places where the shares of the Company are listed, the Company may also send or dispatch the aforesaid copy to holders of overseas listed foreign shares through the Company’s website or electronically, instead of sending or dispatching the same in the manner prescribed in the preceding paragraph of this article.

If the resignation notice of an accounting fi rm contains any statement of explaining the situations, an accounting fi rm may request the board of directors to convene an Extraordinary General Meeting for presenting the explanations regarding the resignation given by the accounting fi rm.

The existing Article 232 shall be renumbered as Article 233, and the existing Article 232, which reads:

In the event of a merger or division of the Company, a proposal of merger or division shall be made by the board of directors and after the proposal is approved in accordance with the procedures stipulated in the Articles, such proposal shall be examined and approved in accordance with the law. If a shareholder objects to a proposal of merger or division, such shareholder shall have the right to demand the Company or those shareholders who approved the proposal of merger or division to purchase his/her shares at a fair price.

The content of a resolution on the merger or division of the Company shall be made into a special document available for inspection by the shareholders. For holders of overseas listed foreign shares of the Company, the aforesaid document shall be delivered by post.

Is to be amended to:

In the event of a merger or division of the Company, a proposal of merger or division shall be made by the board of directors and after the proposal is approved in accordance withthe procedures stipulated in the Articles, such proposal shall be examined and approved in accordance with the law. If a shareholder objects to a proposal of merger or division, such shareholder shall have the right to demand the Company or those shareholders who approved the proposal of merger or division to purchase his/her shares at a fair price.

The content of a resolution on the merger or division of the Company shall be made into a special document to be available for inspection by the shareholders. For holders of overseas listed foreign shares of the Company, the aforesaid document shall be delivered by post.

— 33 —

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AFTER LISTING AND ISSUE OF A SHARES

APPENDIX II

Without violating the laws and regulations or listing rules of the places where the shares of the Company are listed, the Company can also send or dispatch the documents mentioned above to holders of overseas listed foreign shares through Company’s website or by email, instead of sending or dispatching the same in the manner prescribed in preceding paragraph.

The existing Article 233 to Article 264 shall be renumbered as Article 234 to Article 265 respectively.

— 34 —

AI assistant

Guangzhou Automobile Group Co., Ltd. — Proxy Solicitation & Information Statement 2011

50469_rns_2011-06-10_1a53742c-901f-4100-8ade-34991057b4c2.pdf

GUANGZHOU AUTOMOBILE GROUP CO., LTD. 廣州汽車集團股份有限公司

(1) DISCLOSEABLE TRANSACTION — PROPOSED A SHARE ISSUE AND THE PROPOSED MERGER AND

(2) PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

CONTENT

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

GUANGZHOU AUTOMOBILE GROUP CO., LTD. 廣州汽車集團股份有限公司

(1) DISCLOSEABLE TRANSACTION — PROPOSED A SHARE ISSUE AND THE PROPOSED MERGER AND

(2) PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

LETTER FROM THE BOARD

A. PROPOSED A SHARE ISSUE AND THE PROPOSED MERGER

1. Structure of the A Share Issue

2. Conditions precedent to the A Share Issue

3. Key Terms of the Merger Agreement and the Supplemental Merger Agreement

LETTER FROM THE BOARD

4. The Exchange Ratio

5. The Cash Alternative

LETTER FROM THE BOARD

6. The Additional Cash Alternative

LETTER FROM THE BOARD

7. Exit rights of Dissenting Shareholders of the Company

(i) Entitlement to the exit rights of Dissenting Shareholders

(ii) Exercise of the exit rights of Dissenting Shareholders

LETTER FROM THE BOARD

8. Arrangements of GC during the Interim Period

9. Effect of the Proposed Merger

10. Lock-up requirements

11. Information on GC, the Company and GAIG

12. Reasons for and benefi ts of the A Share Issue and the Proposed Merger

13. Listing Rules Implications

B. PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

LETTER FROM THE BOARD

C. PROFIT FORECASTS

1.

2.

LETTER FROM THE BOARD

D. THE EGM

LETTER FROM THE BOARD

E. POLL AT GENERAL MEETING

F. RECOMMENDATION

G. ADDITIONAL INFORMATION

APPENDIX I

1. PRC PROFIT FORECAST

PRC Profi t Forecast of the Group Forecasted period: one year ending 31 December 2011

APPENDIX I

2. HK PROFIT FORECAST

Bases and principal assumptions

3. LETTER FROM PRICEWATERHOUSECOOPERS

Guangzhou Automobile Group Company Limited

PricewaterhouseCoopers

4. LETTER FROM THE BOARD

GUANGZHOU AUTOMOBILE GROUP CO., LTD. 廣州汽車集團股份有限公司

For and on behalf of the Board of Guangzhou Automobile Group Co., Ltd. 廣州汽車集團股份有限公司 Zhang Fangyou Chairman

Is to be amended to:

Is to be amended to:

Is to be amended to:

More from Guangzhou Automobile Group Co., Ltd.

Guangzhou Automobile Group Co., Ltd. Proxy Solicitation & Information Statement 2011