Cummins and Shaanxi Automobile Group Form Joint Venture to Produce Cummins ISM Heavy-Duty Engines in China

The ISM is one of the flagship engines of Cummins heavy-dutyproduct line. In addition to proven fuel economy and dependability,the ISM meets the toughest emission standards worldwide. The ISM isthe ideal power choice for heavy-duty vehicles with gross vehicleweight between 26 and 44 tons -- including trucks, long-distancecoaches and double-decker buses.

The agreement was signed by John Watkins, Cummins Vice Presidentand the head of Cummins operations in China, and Wang Hongjie, ViceChairman of Cummins China Investment Co. Ltd., together with ZhangYupu, Chairman of Shaanqi Group and Nie Xinyong, Chairman of ShaanxiHeavy-duty Truck Company Ltd., a subsidiary of Shaanqi Group.

The companies initially will invest $24 million in capital intothe joint venture company, which will have access to the most advancedCummins 11-liter, full-electronic ISM engine platform from 305 to 440horsepower(hp). Construction of the plant could begin as soon as thefourth quarter of 2005 and production could start as early as thethird quarter of 2006. The market for heavy-duty trucks with payloadsgreater than 15 tons is expected to be around 200,000 units by 2010.The joint venture's projected production is 50,000 units by 2010.

Steve Chapman, Cummins Group Vice President - Emerging Markets andBusiness, thanked the Shaanxi provincial and Xi'an municipalgovernments for their strong support in remarks at today's signingceremony.

"The demand in China for high-performance and environmentallysound heavy-duty truck engines is growing quickly, and this agreementshould allow Cummins to position itself to compete in this segment ofthe market," Chapman said. "By combining our technology with a stronglocal partner, which offers a significant OEM base for our products,Cummins is poised to significantly expand its portfolio of engineproducts in the important China market."

"Today's signing is an important milestone in Shaanqi'sinternational cooperation since the 1980s. Shaanqi is a leader inChina's heavy-duty truck market and Cummins is a leading diesel makerworldwide with a solid footprint and long-term commitment in China,"said Chairman Zhang. "Our cooperation is a win-win for both sides. Itwill no doubt lead to a new chapter in China's trucking industry."

Jim Kelly, President of Cummins Engine Business, added that theCompany's position as a technological leader and the provenperformance of the ISM will serve Cummins well as it enters thisportion of the China market.

"The ISM has consistently proven itself with the most demandingheavy-duty truck customers in the world, and we're excited about thechance to extend the Cummins product line in China," Kelly said. "Welook for this partnership to provide heavy-duty customers in Chinawith a top-of-the-line product choice."

Shaanqi Group, headquartered in Xi'an, is the leading producer ofheavy-duty trucks (payload above 15 tons) in China. Shaanqi, which hasbeen buying a small number of imported ISM engines from Cummins forseveral years, will be the largest customer for the engines producedby the joint venture. Cummins East Asia marketing organization willhandle non-Shaanqi sales of ISM engine made at the new plant.

Cummins has had a presence in the China market for 30 years, andcurrently makes medium-duty and high-horsepower engines, as well asfilters, alternators, turbochargers and generator sets through anumber of joint venture and wholly owned operations throughout thecountry.

Heavy-duty trucks with payload above 15 tons and engine powerabove 300 hp are part of China's "Tenth Five-Year Plan." With theworld's second-longest highway system, behind only the United States,and robust GDP growth, China's heavy-duty trucking industry has seenrapid development since 1999. The country plans to implement Euro 3equivalent emission standards that will dramatically push forward thetechnological advancement of diesel engines.

About Shaanxi Automobile Group Company Limited (Shaanqi Group)

Shaanqi Group is the one of the leading producers of heavy-dutyvehicles in China. With 11,000 employees, Shaanqi produced over 20,000heavy-duty trucks in 2004 - a 76 percent over 2003. Shaanqi reportedsales of $600 million and ranks as one of China's Top 500 enterprises.Shaanqi's product line includes off-road vehicle, heavy-duty andmedium-duty trucks, and high-end bus chassis.

Shaanqi Group's aftermarket network in China consists of more than20 regional offices, 200 distributors, 50 quick service stations alongmajor highways and more than 300 service points across the country.Further information can be found in Shaanqi's website at www.sxqc.com.

About Cummins in China

Cummins is the largest foreign investor in the China diesel engineindustry. The Company's ties to the country date back to 1975 whenthen-CEO J. Irwin Miller led the first Cummins delegation to Beijing,making him one of the first American business leaders to seekopportunities in China.

Cummins began licensing its engine technology in China in 1981 andformed its first joint venture in the country in 1995. Today, Cumminsoperates 20 facilities in China - including six manufacturing sites -with all areas of the Company's business represented in China. Eightof the 14 Cummins engine series have been produced in China. Cumminsconsolidated and unconsolidated sales in China exceeded $1 billion in2004, representing nearly 10 percent of Cummins total consolidated andunconsolidated revenue.

About Cummins

Cummins Inc., a global power leader, is a corporation ofcomplementary business units that design, manufacture, distribute andservice engines and related technologies, including fuel systems,controls, air handling, filtration, emission solutions and electricalpower generation systems. Headquartered in Columbus, Indiana, (USA)Cummins serves customers in more than 160 countries through itsnetwork of 550 distributor facilities and more than 5,000 dealerlocations. With more than 24,000 employees worldwide, Cummins reportedsales of $8.4 billion in 2004. Press releases can be found on the Webat www.cummins.com.