---

Sundiro and Orbital to Manufacture OCP Two-Stroke Engines in China

8 December 2000

Sundiro and Orbital to Cooperate in the Manufacture Of OCP Automotive Two-Stroke Engines in China

    PERTH, Australia, Dec. 8 Orbital Engine Corporation
and Hainan Sundiro Motorcycle Company have entered into a
Memorandum of Understanding aimed at establishing manufacturing facilities for
the production of Orbital Combustion Process (OCP) automotive two-stroke
engines for the Chinese market.
    This agreement is a pre-cursor to obtaining a firm automotive manufacturer
commitment to use Orbital-equipped two-stroke engines in a production vehicle
and signifies the prospective availability to third parties in China.
    Sundiro is a very successful motorcycle manufacturer with substantial
facilities on Hainan Island and in Shanghai.  Sundiro's extensive experience,
capability and existing facilities will form the basis for the production of
OCP automotive two-stroke engines.
    This announcement follows Sundiro's public commitment in October 1998 to
apply Orbital technology to their scooters and whose first application entered
production this year.  Sundiro produced in excess of 600,000 scooters in 1999
and is firmly established as a technology leader in the Chinese market.
    Orbital has both 2 and 3-cylinder automotive engine designs that have
potential application in passenger cars, mini-vans and/or multi-purpose
vehicles as used in China.  An OCP automotive two-stroke engine can be
produced at much less cost than equivalent performance conventional four-
stroke engine because of its fewer parts and lighter weight.  These base
engine benefits coupled with direct fuel injection allow reductions in fuel
consumption and exhaust emissions further lowering the production of carbon
dioxide, a major contributor to greenhouse gases.
    "With their committed adoption of Orbital technology across a range of
vehicle applications, Sundiro is making a significant contribution to the
future air quality of China," Orbital CEO Mr. Kim Schlunke said.
    In addition to Orbital's existing and advanced customer relationships in
China, Sundiro and Orbital are seeking further expressions of interest from
other vehicle manufacturers for the future supply of engines.  It is
anticipated that the economies of scale achievable from a common engine
facility, that may supply multiple customers and applications, will yield a
highly attractive and competitive product.
    The interest by Sundiro follows the Technical Cooperation Agreement signed
between Orbital and Texmaco Perkasa Engineering in Indonesia in late 1998.
Texmaco are well advanced in the production implementation of the OCP
3-cylinder engine based on the Genesis 100-vehicle fleet trial launched in
Australia in 1996.  This two-stroke vehicle fleet accumulated in excess of
5.6 million kilometres over almost four years and proved invaluable in
demonstrating the merits of OCP automotive two-stroke engines for both the
consumer and the manufacturer alike.