Cummins Engine forms joint venture with China's largest truck maker; Cummins also announces start-up of Shanghai filter and opening of Cummins Engine (Beijing).

COLUMBUS, Ind. and BEIJING--(BUSINESS WIRE)--July 24, 1996--

-- Approximately 25,000 engines to be produced annually through

agreement between Dongfeng Motor and Cummins Engine

-- Second Chinese engine joint venture in past year will now

enable Cummins to offer entire engine line, participate in

major infrastructure development

Cummins Engine Company Inc. (NYSE:CUM) of the United States announced today that it has formed a joint venture with Dongfeng Motor Corporation of China to produce Cummins C Series engines in China. Also today, Cummins announced the start of production by its Shanghai Fleetguard Filter Co. and the opening of Cummins Engine (Beijing) Co., Ltd.

Cummins is a leading worldwide producer of diesel engines, and Dongfeng is China's largest manufacturer of trucks. The new joint venture, named Dongfeng Cummins Engine Company Ltd., is expected to produce approximately 25,000 diesel engines annually within 10 years. The joint venture will produce the C Series engine at a plant in Xiangfan, Hubei Province, beginning later this year. Dongfeng has manufactured the companion B Series engine under license from Cummins since 1986 at a factory adjacent to the site of the joint venture plant, with annual production already exceeding 20,000 B Series engines for Dongfeng cargo trucks. The two companies are currently evaluating the possibility of merging the B and C Series manufacturing operations into a single joint venture to better utilize assets.

Last October, Cummins converted a license agreement with China National Heavy Duty Truck Corporation to produce the L10, NT, K19 and KV engines into a joint venture located in Chongqing. Together with the Dongfeng agreements, Cummins will now be able to offer Chinese customers locally produced engines from 70 to 2,000 horsepower.

Shanghai Fleetguard, a joint venture between Cummins and Dongfeng subsidiary Shenlong Automotive Accessories Corp., was officially dedicated on July 23, and will produce engine filters. Operating out of new, world-class facilities in the Pudong New Area, the joint venture provides filtration technology and manufacturing capacity for all Cummins and Dongfeng operations in China and is developing products for other engine manufacturers.

An official opening ceremony was held today at Cummins Engine (Beijing), a wholly-owned subsidiary, which will assemble generator sets for the Chinese market. In addition, Cummins subsidiaries have formed joint ventures to produce Holset turbochargers and Newage alternators, both at Wuxi, China.

Cummins President and Chief Operating Officer Tim Solso stated during the ceremony today that, "The Dongfeng-Cummins and Shanghai Fleetguard joint ventures mark important steps in the relationship between Cummins and Dongfeng, as well as in the strategic plan of Cummins. The partnership between Dongfeng and Cummins is successful because of a shared vision and a relationship characterized by equality and respect.

"Together with our other new ventures with Komatsu of Japan, Iveco-New Holland of Europe, TELCO of India, and Wartsila of Finland, the Dongfeng-Cummins alliance offers us a significant presence in a key market and has global competitive importance. We are honored to have a strategic alliance with Dongfeng Motor Corporation."

Dongfeng President Ma Yue noted that, "Dongfeng and Cummins have a long and mutually beneficial partnership that already includes a B Series license agreement, a joint venture to manufacture filters and a C Series joint venture. Together, we are committed to further developing the relationship.

"Dongfeng has held a leadership position in the Chinese automotive market for many years. In order to maintain our market position and increase our profitability, we need to offer the Chinese customer a world-class product and service support. Both Dongfeng and Cummins are committed to that objective."

It also was announced that Wang Hongjie, a Chinese citizen who formerly worked at Cummins' U.S. plant where the B and C Series engines are produced, has been named general manager of the joint venture. Wang received his engineering degree from Qinghua Univ. and joined Cummins in 1994. The joint venture partners also announced that Chen Facheng, current plant manager of the Dongfeng B Series factory, was appointed as deputy general manager. Chen holds a degree in internal combustion engines from Shandong Univ. and has served as plant manager since 1991.

Engines produced by the new joint venture will range from 150 to 240 horsepower and serve the construction, cargo truck, transit bus, power generation and marine markets. With continually updated design, the C Series engines are uniquely equipped to meet the needs of Chinese customers.

Dongfeng, headquartered in Shiyan, Hubei, China, was founded in 1969. It is now the eighth largest company in China and the largest Chinese automotive industry group. It employs over 120,000 people in 52 factories throughout China, producing a wide range of automobiles, trucks, buses and automotive components. Dongfeng reported sales of RMB 16 billion (US $1.93 billion) in 1995. In addition to Cummins, key international partners include Nissan and Honda of Japan and Citroen of France.

Cummins, headquartered in Columbus, Indiana, U.S.A., is a leading worldwide designer and manufacturer of diesel engines and related products. These engines provide power for its key markets: automotive, power generation, industrial and filtration. Cummins reported record sales of US $5.2 billion in 1995. It is the largest producer of diesel engines above 200 horsepower in the world. Cummins' home page on the Internet can be found at http://www.cummins.com.

Cummins employs more than 24,000 persons in its manufacturing, assembly, and research and engineering facilities in more than one dozen countries and has a network of distributors in 110 countries. More than 40 percent of its sales are to markets outside the United States.

CONTACT: Cummins Engine Company, Inc., Columbus

Ann C. Smith/Steven M. Chapman, 812/377-3524

or

Cummins Engine (Beijing) Company, Ltd.

Francis S. Chu, 86-10-6505-4209/10