Mechanical Dynamics Receives More Than $500,000 in Software Orders from Fiat

    ANN ARBOR, Mich., Jan. 23 Mechanical Dynamics, Inc.
, a worldwide provider of software and services for the virtual
prototyping market, today announced that it received more than $500,000 in
orders from Fiat S.p.A. , primarily covering new annual licenses of
its market-leading ADAMS(R) Functional Digital Car software(TM).  The software
was delivered to Fiat during Mechanical Dynamics' calendar year ended December
31, 2000.
    Headquartered in Turin, Italy, Fiat is the only major Italian automaker
and was one of the founders of the European automobile industry.  Best known
for its vehicle lines, which include Fiat, Alfa Romeo, Lancia, Ferrari, and
Maserati, Fiat Group companies also manufacture heavy trucks, agricultural
equipment, and aircraft engines.
    Fiat has utilized virtual prototyping software from Mechanical Dynamics
for the last 10 years in suspension and driveline development, gearbox
modeling, and ride and handling simulation, among other areas.  The new
agreement, which increases the number of ADAMS software licenses at Fiat by 50
percent, is part of Fiat's strategic decision to deploy the ADAMS Functional
Digital Car technology throughout the entire vehicle development organization,
including Fiat Auto, Fiat Research Center, Magneti Marelli Suspension
Division, Alfa Romeo, ELASIS, IVECO, and Ferrari, and suppliers such as UTS,
I.D.E.A.5 Institute, and SRS.
    Pursuant to Mechanical Dynamics' revenue recognition policy, revenue under
annual software licensing arrangements is deferred and amortized ratably over
the terms of the agreement.  Mechanical Dynamics therefore expects to
recognize more than $400,000 in software revenue from these orders during the
course of 2001.
    Except for historical information contained herein, some matters discussed
in this news release constitute forward-looking statements which involve risks
and uncertainties that could cause actual results to differ materially from
those projected.  These include possible delays in developing, completing, or
shipping new or enhanced products, as well as other risks or uncertainties
that are detailed from time to time in reports filed by Mechanical Dynamics,
Inc. with the Securities and Exchange Commission, including Mechanical
Dynamics, Inc.'s registration statement on Form S-1 and related prospectus
dated May 14, 1996 and the "Risk Factors" described therein.
    Mechanical Dynamics pioneered the field of mechanical system simulation
with its market-leading ADAMS(R) software.  Engineering teams use ADAMS to
build and test functional virtual prototypes of their complex mechanical
system designs.  The company offers extensive implementation services,
including consulting and training.  In this way, Mechanical Dynamics partners
with its customers to help reduce the time, costs, and risks of product
development and meet the "Smarter to Market(TM)" challenge.
    Additional information about Mechanical Dynamics can be obtained by
writing to the company at 2300 Traverwood Drive, Ann Arbor, Michigan 48105.
Phone: 734-994-3800.  Fax: 734-994-6418.  E-mail: info@adams.com .
Online: http://www.adams.com .
    ADAMS and the Mechanical Dynamics logo are registered trademarks of
Mechanical Dynamics, Inc.  All other company, brand, or product names are or
may be trademarks of their respective holders.