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PSA Peugeot Citroen and Ford Sign New Diesel Engine Agreement

11 October 1999

PSA Peugeot Citroen and Ford Motor Company Sign New Diesel Engine Co-Operation Agreement

    PARIS, Oct. 8 -- Jac Nasser, President and Chief Executive
Officer of Ford Motor Company and Jean-Martin Folz, Chairman of the managing
board of PSA Peugeot Citroen, today signed a framework agreement to extend the
two companies' co-operation in the area of diesel engines.
    As a result, consumers will benefit from a full range of high-technology,
environmentally-friendly diesel engines at highly competitive prices.
    The agreement is a collaboration on specific research and engine
development which covers an extensive range of applications in the area of
diesel direct injection engines for passenger cars and light commercial
vehicles.  The four specific projects include:

    -- An extension to the family of small aluminium diesel engines currently
       being engineered by PSA Peugeot Citroen and Ford Motor Company

    -- Enhanced technology on a second generation of mid-sized direct
       injection (HDI) engines

    -- A family of Vee configuration diesel engines for both companies' large
       vehicles

    -- An extended range and new technology on a family of light commercial
       vehicle engines

    Combined Ford Motor Company and PSA Peugeot Citroen teams will be
assembled for each project at the start of the preliminary study phase this
month.  The projects will utilise both companies' existing key engineering
facilities in Europe.  PSA Peugeot Citroen will manage both the small aluminum
and mid-sized HDI engine projects.  Ford will oversee development of the large
car engines and light commercial vehicle engines.
    Following further development and manufacturing process implementation,
engines related to this latest phase will begin delivery in 2003.  Delivery of
the first diesel engine resulting from an exisiting cooperative agreement
between Ford Motor Company and PSA Peugeot Citroen will begin in 2001.
    The new agreement also calls for joint teams to work on a number of diesel
engine research projects, with the goal of lowering fuel consumption, reducing
emissions, enhancing performance and weight through the utilisation of new
technologies and advanced materials.
    "This joint co-operation will make optimum use of both companies'
technical expertise resulting in highly sophisticated technologies, earlier
product availability, lower fuel consumption and more environmentally friendly
diesel operation," said Jac Nasser.  "Our consumers will benefit from an
expanded range of outstanding diesel engines."
    "Our initial project with Ford has been operating smoothly for one year,"
said Jean-Martin Folz.  "In addition, the outlook for the European diesel
engine market is favourable. These two factors have led us to extend our
cooperation, which perfectly illustrates our strategy of implementing timely
alliances with competitors.  These alliances benefit both partners, while
allowing them to retain their independence.  Customers also benefit, thanks to
the resulting cost savings."