Net sales for the fiscal 2010 first quarter were $4.6 million compared with $9.3 million during the same period a year earlier - a period that benefited from an inflated order backlog due to a fiscal 2008 fourth quarter labor slowdown.

The company reported a net loss for the fiscal 2010 first quarter of $136,000, or $0.04 per share, compared with net income of $287,000, or $0.08 per diluted share, last year.

Gross profit as a percentage of sales for the first fiscal quarter of fiscal 2010 was 16 percent compared with 21 percent in the same period a year ago, reflecting the impact of sales volume and lower overhead absorption.

"It appeared early in the quarter that the global recession was having only a modest impact on our business. Unfortunately, some of our European customers were impacted late in the economic cycle -- thereby reducing our fiscal first quarter performance. However, while the fiscal second quarter also has been slow to ramp up, business inquiries from new and existing customers started to accelerate within the last week. These trends that are very encouraging and offer hope for a near-term recovery," said Roland Kohl, president and chief executive officer.

He noted that the decrease in net sales for the fiscal 2010 first quarter was amplified by the company's recently enacted pricing policy (as previously reported) in which changes in the cost of certain raw materials are passed through to the company's customers. "As a result of this new pricing policy, a decrease or increase in the cost of raw materials can have a positive or negative impact on net sales -- even if the same number of units are manufactured and sold. During the quarter ended June 30, 2009, the inventory of the much higher priced raw materials was used up and the cost of many of the used raw materials dropped sharply, thereby substantially decreasing net sales," Kohl said.

"Despite our optimism at fiscal year-end that our major European customers would be spared the full-impact of the global recession, the company from the beginning of the downturn initiated measures to weather the storm and to prepare the company to take advantage of future opportunities," Kohl emphasized. He noted that the company elected to retain its skilled and experienced staff during the downturn in order to be well-prepared for the expected recovery and new business opportunities. "This higher overhead relative to the company's sharply reduced sales in the fiscal first quarter obviously impacted the company's operating performance. Nonetheless, we regard this as a short-term investment with long-term benefits," Kohl added.

Selling, general and administrative expense for the fiscal quarter decreased by $440,000 or 27 percent, from the same period a year ago -- primarily due to a focus on streamlining costs and increased utilization of automation in its manufacturing process. However, selling, general and administrative expense as a percentage of sales for the first fiscal quarter of fiscal 2010 was 25.4 percent compared with 17.3 percent in the same period a year ago, due to lower net sales.

The company realized a $281,000 currency exchange gain during the fiscal quarter ended June 30, 2009 compared with an $8,000 currency exchange loss during the same period last year due to the strengthening value of the euro compared to the U.S. dollar.

Kohl highlighted the company's solid financial position, with cash equivalents, and restricted cash of $6.98 million. At June 30, 2009, the company had working capital of $8.9 million. Total shareholders' equity at June 30, 2009 was $11.3 million compared with $11.4 million as of 31.March 2009. The company's current ratio was 3.14:1 at June 30, 2009.

As noted above, the company reacted to the current economic recession early on and took precautious steps to weather the current economic downturn. "The goal of our strong actions was to provide a buffer to ride out the recessionary cycle, without losing sight of the company's long-term strategy," Kohl said. He emphasized that these actions included reducing the company's inventory levels (turning the inventory into cash); further increasing its collection of accounts receivable; and, reducing the company's variable and administrative costs. "As a result of these actions and despite the loss during the fiscal first quarter, the company at June 30, 2009 had more cash, cash equivalents and restricted cash than it did at the beginning of the fiscal quarter ($6.98 million on June 30, 2009 compared to $6.84 million on March 31, 2009), and inventory levels and outstanding receivables were both significantly reduced," Kohl said. As a result, he noted, over half of the company's current asset value as of June 31, 2009 consisted of cash, cash equivalents and restricted cash.

Kohl indicated that he believes that the company's current cash position, combined with its reduced operating expenses, provides the company with an adequate financial position to overcome detrimental operational periods during this recession, while still positioning the company to take immediate advantage of the anticipated rebound in business orders when the economy recovers.

About Highway Holdings

Highway Holdings produces a wide variety of high-quality products for blue chip original equipment manufacturers -- from simple parts and components to sub-assemblies. It also manufactures finished products, such as LED lights, radio chimes and other electronic products. Highway Holdings operates three manufacturing facilities in the People's Republic of China.

Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements which involve risks and uncertainties, including but not limited to economic, competitive, governmental, political and technological factors affecting the company's revenues, operations, markets, products and prices, and other factors discussed in the company's various filings with the Securities and Exchange Commission, including without limitation, the company's annual reports on Form 20-F.

                     HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES                       Consolidated Statement of Income                 (Dollars in thousands, except per share data)                               (Unaudited)                                                       Quarter Ended                                                        June 30                                                   2009           2008                                                 -------        -------  Net sales                                      $ 4,615        $ 9,347  Cost of sales                                    3,872          7,402                                                 -------        -------  Gross profit                                       743          1,945  Selling, general and   administrative expenses                         1,173          1,613                                                 -------        -------  Operating (loss) / income                         (430)           332   Non-operating items    Interest expenses                                (18)           (40)    Exchange gain / (loss), net                      281             (8)    Interest income                                    4             11    Other income                                      10             15                                                 -------        -------      Total non-operating income       (expenses)                                    277            (22)   Net (loss) / income before income   tax and noncontrolling interests                 (153)           310  Income taxes                                         0             39                                                 -------        -------  Net (Loss) / Income                               (153)           271  Less: Net income (loss)   attributable to noncontrolling   interest                                           17             16                                                 -------        -------  Net (Loss) / Income attributable   to Highway Holdings Limited                   $  (136)       $   287                                                 =======        =======   Net (Loss) / Income attributable   to Highway Holdings Limited                   $ (0.04)       $  0.08                                                 =======        =======   Weighted average number of shares    Basic                                          3,747          3,734                                                 =======        =======    Diluted                                        3,747          3,734                                                 =======        =======                                                                                    HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES                          Consolidated Balance Sheet                  (In thousands, except per share data)                                                June 30        March 31                                                2009            2009                                              -----------------------  Current assets:  ---------------    Cash and cash equivalents                 $ 5,949         $ 5,809    Restricted cash                             1,028           1,028    Accounts receivable, net of     doubtful accounts                          2,040           3,426    Inventories                                 3,496           4,010    Prepaid expenses and other     current assets                               590             672                                              -----------------------       Total current assets                    13,103          14,945                                              -----------------------   Property, plant and equipment,   (net)                                        2,739           2,840  Investment in affiliates                          2               2  Intangible assets, (net)                         20              24                                              -----------------------       Total assets                           $15,864         $17,811                                              =======================   Current liabilities:  --------------------    Accounts payable                          $ 1,467         $ 2,166    Short-term borrowing                          951           1,850    Current portion of long-term     debt                                         262             259    Accrual payroll and employee     benefits                                     399             373    Other liabilities and accrued     expenses                                   1,097           1,257                                              -----------------------       Total current liabilities                4,176           5,905                                              -----------------------  Long-term debt - net of current   portion                                        228             294   Deferred income taxes                           163             163                                              -----------------------       Total liabilities                        4,567           6,362                                              -----------------------   Shareholders' equity:  ---------------------    Common shares, $0.01 par value                 37              37    Additional paid-in capital                 11,224          11,224    Retained earnings                              20             154    Accumulated other comprehensive     loss                                          (7)             (6)    Treasury shares, at cost -     37,800 shares as of March 31,     2009; and June 30, 2009     respectively                                 (53)            (53)                                              -----------------------       Total Highway Holdings        Limited shareholders' equity           11,221          11,356                                              -----------------------  Noncontrolling Interest                          76              93                                              -----------------------    Total shareholders' equity                 11,297          11,449                                              -----------------------       Total liabilities and        shareholders' equity                  $15,864         $17,811                                              ======================= 

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 CONTACT: Maier & Company, Inc.          Gary S. Maier          (310) 442-9852 

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