For Our Dealers

THE FIRST CHINESE SUVs and PICKUPS WILL BE HERE SOON! HIGH QUALITY, ENTRY-LEVEL VEHICLES WITH $1,650 FRONT END AND OPTION FOR AN ADDITIONAL $300 PER VEHICLE.

Secure Your Territory NOW!



Dealer Partner Network

CHAMCO AUTO believes that dealer success and loyalty is a critical factor for our success. We are developing a U.S. network of 150 initial selling points for our first two years of operation. We expect to complete this process soon, selecting successful dealer partners, each with strong CSI scores and reputation, along with sound financials and a strategic site location.

To reduce a dealer's up-front costs, we will temporarily defer requirements for exclusive facilities until such times as stated below. As a result, dedicated showrooms and service facilities are built as dealer sales clearly justify it. CHAMCO AUTO is taking whatever steps it can to ensure that dealer partners are profitable from Day 1.

CHAMCO AUTO is dividing the U.S. into 400 exclusive, protected territories - between 500,000-750,000 people per selling point - with no franchise fee for dealerships. However, only 150 of these U.S. selling points will be awarded in the first two years of operation. Dealer partners receive guaranteed selling point preferences. Unlike other auto companies, our goal is to establish new marketplace dynamics that will limit competition among dealers to protect their gross profits. We will be sure to cover the entire United States, including the 60 major metropolitan areas (which will also allow us to benefit from discounted nationwide advertising rates).

Here's how the investor dealer partnership works in the U.S.:

• Selected dealer partners - up to 150 - purchase Membership Units in our Limited Liability Corporation (LLC). The current participation fee is $300,000 for one Membership Unit (which provides dealer partners with derivative ownership of 0.05% of ZXAUTO NA). For full details, please contact us.


• Based on CHAMCO AUTO's projections, and using a price/earnings multiple that is conservatively set below that of Honda, Nissan and Toyota, with a five-year forecast, we estimate that each $300,000 investment could grow to be worth $3.7 million in 2011 (see the Financial Summary section in our brochure) - with no guarantees intended or implied. As a consequence, dealer partners are projected to earn as much after tax from their equity participation as they will earn from selling the cars, based on 3,750 cars sold over 5 years, so dealer investments are really a two-for-one proposition.


• Once registered common shares of CHAMCO AUTO's importing subsidiary (ZXAUTO NA) are distributed to all participating dealer partners and other investors, the stock may be sold at any time for the prevailing market value.


• CHAMCO AUTO is also offering a special one-time option called a "Put." About three months after our cars go on sale in the U.S., dealer partners will have the opportunity, at their sole discretion, to exchange their Membership Unit(s) and receive, in return, a $300 per car capital gain (on top of their $1,650 front end) for five years, for up to 4,000 vehicles sold, yielding a projected $1.2 million return on an investment of $300,000. Alternatively, dealer partners can keep their stock and watch it grow to its projected $3.7 million.


• Semi-annual dividend payments will be triggered for U.S. dealer partners if CHAMCO AUTO's Pickups and SUVs are not in their showrooms by June 1st, 2008. These dividends will be terminated at the time the vehicles are shipped or when dealers receive registered common shares.

CHAMCO AUTO U.S. Dealer Partner Highlights

• Each dealer must have a minimum floor-plan line of credit of $1.5 million available for CHAMCO AUTO's vehicles. CHAMCO AUTO is currently negotiating with several major worldwide financial institutions to offer our dealer partners floor-plan credit, captive financing, and other banking needs.


• Dealers may initially use their existing facilities to showcase and service CHAMCO AUTO's vehicles, with all facilities approved as part of our site inspection process.


• Initially, dealers are required to allocate showroom space for two CHAMCO AUTO vehicles.


• Initially, we will temporarily defer requirements for exclusive facilities and allow shared facilities. For the period when only SUVs and Pickups are available, (1) should dealers reach a sales volume of 360 new CHAMCO AUTO SUVs and Pickups in a rolling 6-month period, they will be required to construct a stand-alone showroom and (2) dealers will be permitted dual service operations until their territory's CHAMCO AUTO units in operation reaches 5,000, or they achieve a sales volume of 500 new CHAMCO AUTO vehicles within a 6-month period, whichever milestone is achieved first. However, once two additional vehicle types are added to the product line (e.g., Sedans and Crossovers), dealers will be required to build compliant self-standing showrooms and service operations within one (1) year of receiving the delivery of the full four vehicle types, regardless of the sales volume and/or units in operations thresholds stated above. The awarding of a dealership is predicated on a dealer agreeing to construct compliant self-standing facilities.


• Dealers are required to supply two dedicated salespeople for CHAMCO AUTO's products and two trained technicians for service.


• Dealers are required to budget $300 in marketing/advertising for each new vehicle, in addition to the funds that CHAMCO AUTO has budgeted for nationwide advertising.


• All dealers must place an initial order of 100 SUVs and Pickups, in any combination, delivered over a 3-month period (and a later order for Sedans and Crossovers), to ensure the pipeline of new cars satisfies demand and dealers do not run out of product.


• Dealers must back up all orders with assignable, irrevocable standby letters of credit.


• Dealers are required to purchase a marketing kit that includes signage and special tools, at our cost (approximately $20,000) and an inventory of spare parts (approximately $40,000).

CHAMCO AUTO in Canada

Similar to our plans for Mexico, CHAMCO AUTO is in the process of establishing a distribution management corporation for Canada, initially with about 80 exclusive selling points. This management distribution company, ZXAUTO Canada, to be partially owned by Canadian dealers, will be responsible for importing and distributing; providing logistics, parts under warranty and services; and contributing to the advertising and marketing to capture the Canadian market. The plan is to complete homologation of cars for Canada about two months after the U.S. (the requirements are largely identical).

FOR DEALER INQUIRES PLEASE CONTACT:

U.S. Dealers:

Rick Kalika, EVP Sales & Dealer Development

Phone: (973) 335-3930 ext. 15

Mexican Dealers:

Oscar Margain, Senior Vice President-Mexican Operations

Phone: 551-5108194

Michael Hoyt, Vice President & Dealer Development

Phone: (360) 951-9000

Javier Mendoza, Mexican Liaison

Phone: (973) 335-3930 ext. 48

Canadian Dealers:

H. Dennis Kammerer, Director of Dealer Development

Phone: (845) 661-5570

Or email us at: dealerinfo@chamcoauto.com

Dealerships that represent the following manufacturers have already joined and invested in Chamco Auto:



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