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ZF Meritor Joint Venture Finalized; Meritor to Record One-Time Gain

1 September 1999

ZF Meritor Joint Venture Finalized; Meritor to Record One-Time Gain

    TROY, Mich., Sept. 1 -- Meritor Automotive Inc.
announced today that it has finalized its joint venture with ZF
Friedrichshafen AG to form ZF Meritor LLC.  The joint venture, previously
announced on June 9, has received customary regulatory approvals and will
begin operations immediately.
    Meritor transferred to the new company the assets of its heavy
transmission business, and its 60 percent interest in Meritor Clutch Company,
while ZF contributed leading-edge transmission technology and made a cash
payment to Meritor.  Meritor and ZF each own 50 percent of the joint venture.
    As a result of the transaction, Meritor expects to record a one-time gain
of approximately $0.25 per share in its fourth quarter ending September 30,
1999.  Meritor will account for the joint venture as an unconsolidated
subsidiary, the ongoing impact of which will be the inclusion of additional
Other Income in the company's consolidated financial statements.
    The new company, based at the former Meritor transmission manufacturing
plant in Laurinburg, N.C., will produce technologically advanced medium- and
heavy-duty transmission components and systems for original equipment
manufacturers and the aftermarket, in the United States, Canada and Mexico.
    Meritor Chairman and Chief Executive Officer, Larry D. Yost, stated:
"Meritor's joint venture with ZF supports our long-term business strategy to
provide our customers with new and technologically advanced products.  This
partnership also supports Meritor's aim to lead in the markets we serve,
increase our customer base and achieve our global growth goals."
    Richard Martello will serve as president of ZF Meritor LLC.  Martello has
more than 25 years of management experience with Meritor and most recently
served as general manager of Meritor's Transmission, Clutch and Driveline
business.
    "Since we announced the intention to form the joint venture, employee
momentum has been quickly building, and customer response has been very
encouraging.  We're eager to apply the strengths of these two global leaders
for the benefit of our customers," said Martello.  "The combination of ZF's
technical expertise, along with Meritor's marketing and distribution know-how
will provide the industry with a broader scope of state-of-the-art products
and services while it supports our business objective to be the best single-
source supplier of commercial transmissions in North America," Martello added.
    Based in Friedrichshafen, Germany, ZF is the market leader in Europe and
second in the world for commercial vehicle transmissions.  The company
reported total 1998 revenues of 10.1 billion DM or $5.9 billion US.  ZF also
manufactures transmissions, axles, chassis and steering systems for various
types of vehicles.
    Meritor, with 1998 sales of US $3.8 billion, is a global supplier of a
broad range of components and systems for commercial, specialty and light
vehicle OEMs and the aftermarket.  Meritor consists of two businesses:  Heavy
Vehicle Systems, a leading supplier of drivetrain systems and components for
medium- and heavy-duty trucks, trailers and off-highway equipment and
specialty vehicles, including military, bus and coach, and fire and rescue;
and Light Vehicle Systems, a major supplier of roof, door, access control,
suspension and seat adjusting systems and wheel products for passenger cars,
light trucks and sport utility vehicles.

    Meritor Internet Web Site Address: http://www.meritorauto.com
    ZF Internet Web Site Address: http://www.zf-group.de