PRESS RELEASE

Detroit Diesel Announces 1996 Results

5 February 1997

    DETROIT, Feb. 5 -- Detroit Diesel Corporation
announced today fourth quarter 1996 revenues of $505 million and net income of
$4.6 million or $0.19 per common share.  These figures compare to fourth
quarter 1995 revenues of $510 million and net income of $4.5 million or $0.18
per common share.
    For the year ended December 31, 1996, Detroit Diesel reported revenues of
$1.96 billion and, following a special charge of $24.9 million, net income of
$3.8 million or $0.16 per common share.  For 1995 revenues were $2.09 billion
and net income was $40.1 million or $1.62 per common share.
    Total 1996 shipments were 156,710, a decline of 6% compared to 166,708
units in the previous year.  Heavy-duty truck engine shipments declined 22%
for the year, reflecting weakness in the market.
    Roger S. Penske, Chairman, said "The fourth quarter and full year
performance both reflect the competitive environment for heavy-duty engines.
I am encouraged however, by our increasing penetration during the last half
of 1996 in the heavy-duty truck market; the growth in our parts and
remanufacturing businesses; and the extent to which they and our automotive
engine business support our efforts at diversification.  Additionally, our
investments during 1996 in new products will position Detroit Diesel for
growth in future years."
    The Company's parts and remanufacturing operations reported continued
growth in the fourth quarter, resulting in 1996 revenue increases of 10% and
23% respectively as compared to the full year 1995.
    Gross margin was 22.2% in the fourth quarter, compared to 23.6% in the
fourth quarter 1995.  Full year 1996 gross margin was 22.9%, compared to 23.3%
for the prior year.  Shifts in the revenue mix among market segments, the
volume decrease in the Company's core heavy-duty truck business and costs for
market support affected gross margin.
    Research and development expenses were $27.1 million for the quarter,
consistent with the prior year's quarter.  For the full year, research and
development expenses increased $10 million, or 11%, reflecting the Company's
commitment to the new Series 2000 and 4000 family of large diesel engines,
which have been jointly developed with MTU Motoren- und Turbinen-Union and
will be launched in 1997.
    Following is a review of the Company's market segments:
    On-Highway Truck.  Revenues were $182 million in the fourth quarter, a
decline of 12% compared to 1995, reflecting the decline in North American
heavy-duty truck sales from the 1995 record.  Total 1996 revenues were $755
million, compared to $929 million in 1995.  Strong shipments in the fourth
quarter resulted in an estimated 29.5% share of the North American heavy-duty
truck market for the quarter and a 26.3% average share for the year.
    Construction and Industrial.  Revenues increased 5% to $100 million in the
fourth quarter compared to 1995.  Full year revenues were $364 million, an
increase of 4% over the prior year, supported by demand for the Company's
higher horsepower two-cycle products.
    Automotive.  Revenues increased 23% to $65 million in the fourth quarter
compared to 1995, due to strong demand for new VM Motori automotive and truck
applications.  Total 1996 automotive shipments rose 2% and revenues increased
4% over the previous year to $222 million.
    Coach and Bus.  Revenues increased 17% to $61 million in the fourth
quarter compared to 1995.  Total 1996 revenues were $220 million versus $188
million in 1995.  The Company's market share position combined with strong
demand in both the transit bus and on-highway coach segments throughout the
year resulted in the revenue growth.
    Marine.  Revenues were $36 million in the fourth quarter, compared to $40
million in the fourth quarter 1995.  Total 1996 revenues increased 5% over
1995 to $156 million.  Introductions of new applications in the commercial
segments and favorable high horsepower mix contributed to the revenue gains
for the year.  The recent introduction of the Series 60 product for commercial
marine applications has also generated strong interest into 1997.
    Power Generation.  Revenues increased 3% to $35 million in the fourth
quarter compared to 1995, due to the strength of higher horsepower two-cycle
engine sales within North America coupled with a mild recovery in the Far East
and Central America regions.  Total 1996 revenues were $133 million versus
$143 million in 1995.
    Military.  Revenues  were $26 million in the fourth quarter, a decline of
10% compared to 1995.  However, for the full year 1996 revenues were $113
million, consistent with the prior year.  Growth in the Company's
remanufactured products partially offset anticipated declines in defense
spending.
    Detroit Diesel Corporation designs, manufactures, markets, services and
provides aftermarket and remanufactured products for a full range of high
performance diesel and alternative fuel engines from ten to 10,000 horsepower
and offers financing through its Detroit Diesel Capital Corporation
subsidiary.  Detroit Diesel serves the on-highway truck, coach and bus,
automotive, construction, mining and industrial, power generation, marine, and
military markets through a worldwide network of more than 2,500 authorized
distributors and dealers.
    This news release may include projections, forecasts and other forward-
looking statements about the Company, the industry in which it competes and
the markets it serves.  The achievement of such projections is subject to
certain risks and uncertainties, fully detailed in the "Cautionary Statement
for purposes of `Safe Harbor' under the Private Securities Act of 1995" in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995,
which is on file with the Securities and Exchange Commission.

                      Detroit Diesel Corporation
                   Consolidated Statements of Income
                (In millions, except per share amounts)


                                Three Months Ended      Years Ended
                                   December 31,         December 31,
                                  1996     1995       1996      1995


    Net revenues                $505.2    $510.4   $1,962.9 $2,087.1
    Cost of sales                393.3     389.8    1,513.8  1,600.8
    Gross profit                 111.9     120.6      449.1    486.3

    Expenses:
    Selling and administrative    78.5      75.0      292.1    311.0
    Research and development      27.1      27.0      105.2     94.8
    Interest                       3.0       2.0       12.1      9.7
    Special charge*                -         -         38.3      -
    Restructuring charge           -        10.0        -       10.0
        Total                    108.6     114.0      447.7    425.5

    Income before income taxes
     and minority interests        3.3       6.6        1.4     60.8

    Provision for income taxes    (1.3)      1.9       (3.0)    19.8
    Minority interests             -          .2         .6       .9
    Net income                  $  4.6     $ 4.5      $ 3.8   $ 40.1
    Primary net income per share$  .19   $   .18     $  .16  $  1.62

    * Consists of product coverage and reduction in the value of an
    investment in Mexico representing $24.9 million after tax or $1.01 per
    share

                        Net Revenues by Market
                             (In millions)

                                Three Months Ended      Years Ended
                                  December 31,         December 31,
                                1996      1995       1996       1995


    On-Highway Truck            $182       207       $755       $929
    Construction & Industrial    100        95        364        351
    Automotive                    65        53        222        213
    Coach & Bus                   61        52        220        188
    Marine                        36        40        156        149
    Power Generation              35        34        133        143
    Military                      26        29        113        114
    Total                       $505      $510     $1,963     $2,087


                      Detroit Diesel Corporation
                      Consolidated Balance Sheets
                (In millions, except per share amounts)


                                               Dec. 31,  Dec. 31,
                                                1996      1995

    ASSETS
    CURRENT ASSETS:
    Cash                                      $  3.0    $  5.1
    Accounts and notes receivable, net         293.1     283.9
    Inventories                                292.1     282.4
    Prepaid expenses, deferred charges and
     other current assets                       19.8      11.4
    Deferred tax assets                         56.4      56.8
        TOTAL CURRENT ASSETS                   664.4     639.6

    PROPERTY, PLANT AND EQUIPMENT
    Net of accumulated depreciation of $125.3
     and $100.0, respectively                  281.5     256.4
    DEFERRED TAX ASSETS                         26.0      15.7
    INTANGIBLE ASSETS, net                     103.9     102.4
    OTHER ASSETS                                36.8      31.0
        TOTAL ASSETS                        $1,112.6  $1,045.1

    LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES:
    Notes payable                             $ 16.6   $  29.2
    Accounts payable                           279.9     275.0
    Accrued expenses                           179.8     191.0
    Deferred tax liabilities                     -         1.3
    Current portion of long-term debt
     and capital leases                          9.8       2.4
        TOTAL CURRENT LIABILITIES              486.1     498.9

    LONG-TERM DEBT AND CAPITAL LEASES           92.6      58.5
    OTHER LIABILITIES                          165.2     138.6
    DEFERRED TAX LIABILITIES                    35.4      26.8
    DEFERRED INCOME                              6.5       7.0
    MINORITY INTERESTS                           5.6       4.9

    STOCKHOLDERS' EQUITY:
    Preferred Stock, par value $0.01 per
     share, no shares issued                     -         -
    Common Stock, par value $0.01 per share,
     24.7 million shares issued and outstanding   .2        .2
    Additional paid-in capital                 217.8     217.4
    Retained earnings                          108.9     105.1
    Additional minimum pension liability        (2.5)     (6.7)
    Currency translation adjustment             (3.0)     (5.0)
    Deferred compensation on restricted stock    (.2)      (.6)
        TOTAL STOCKHOLDERS' EQUITY             321.2     310.4
        TOTAL LIABILITIES AND STOCKHOLDERS'
         EQUITY                             $1,112.6  $1,045.1

SOURCE  Detroit Diesel Corporation