Detroit Diesel to phase down two-stroke engines

22 July 1998

Detroit Diesel Corporation (DDC) announced today its PowerEvolution program, a comprehensive remake of the Company's off-road products and services designed to update product technology, broaden its power range, improve efficiency and increase shareholder value.

Roger S. Penske, Chairman, stated "We see PowerEvolution as a natural response to the constantly changing marketplace. We have invested heavily and formed several new partnerships to develop a new generation of products. However, we have also reinforced our commitment to providing world-class parts and service support for products in use by our customers today."

A key element of the PowerEvolution program is managing the shift in customer demand from the Company's proven line of two-cycle products (Series 53, 71, 92 and 149 engines) to the technologically advanced four-cycle product offerings, including the Series 30, 40, 50, 60, 2000, 4000 and DDC Cento industrial engines. The advanced electronics capabilities of the new four-cycle products provide lower fuel consumption and reduced emissions, while setting new standards for engine performance. Streamlined model offerings and reduced-component design produce distribution and service advantages, thereby lowering the overall cost of ownership for Detroit Diesel customers.

To accommodate this shift in demand, DDC will be phasing down the production of two-cycle products and shifting resources to the four-cycle product activity. Approximately 80% of the current 10,000 two-cycle units produced annually will be affected by this action. This transition is expected to be completed by mid-1999. The service parts and remanufacturing support for the estimated 800,000 two-cycle units in active service around the world will continue into the future.

As the production of the Company's two-cycle products is significantly more labor intensive than the replacement four-cycle products, PowerEvolution will result in the need for approximately 400 fewer workers at the Company's Redford facility. Most of the reductions will come through normal attrition and the significant number of planned retirements over the next twelve months.

Detroit Diesel Corporation is engaged in the design, manufacture, sale and service of heavy-duty diesel and alternative fuel engines, automotive diesel engines, and engine related products; and provides financing through Detroit Diesel Capital Corporation. The Company offers a complete line of diesel engines from ten to 10,000 horsepower for the on-highway; off-road; automotive; and power generation markets. Detroit Diesel services these markets directly and through a worldwide network of more than 2,500 authorized distributors and dealers. DDC is a QS-9000 certified company. Detroit Diesel's major shareholder is Penske Corporation, a closely-held, diversified transportation services company whose operations include Penske Truck Leasing Company, Diesel Technology Company, Penske Automotive Group, Inc., Penske Auto Centers, Inc., Penske Motorsports, Inc., and Penske Capital Partners.

The Penske Group of businesses has annual revenues exceeding $6 billion and employs more than 28,000 people around the world.

Source: Detroit Diesel Corporation