Clean Diesel Technologies Announces 111% Increase in Sales for theSecond Quarter of 2008

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Stamford, CT  -August  12, 2008  -  Clean Diesel  Technologies,  Inc.
(NASDAQ:CDTI; XETRA:CDIA; AIM:CDT), the cleantech emissions reduction
company, today announced financial results for the second quarter and
six months ended June 30, 2008.
 
Recent Highlights:
 
  * Total revenue of $2.6 million in the second quarter of 2008
    compared to $1.2 million in the second quarter of 2007, driven by
    strong sales of Purifier(TM) System particulate matter emission
    control solutions
  * Second successive quarter in which product sales exceed full year
    2007 product sales
  * Total revenue of $5.2 million for the six months ended June 30,
    2008 exceeded total revenue of $4.9 million for all of 2007
  * Entered strategic license agreement with Hilite International,
    Inc., a leading supplier of automotive powertrain components
  * Phase-in of London Low Emission Zone compliance deadlines driving
    demand for Clean Diesel; most recent compliance deadline-July
    2008
 
Dr. Bernhard Steiner, President and CEO of Clean Diesel Technologies,
commented, "We are pleased to see continued international demand  for
Clean Diesel's technologies and solutions as compliance  requirements
become increasingly stringent worldwide and low emission zones (LEZs)
are enacted  in major  cities. In  London, we  have seen  exceptional
pickup for our  technologies in  light of the  LEZ. Furthermore,  our
recent licensing agreement with Hilite International, Inc., is  clear
evidence we  have  been aggressively  working  to expand  our  global
market  position  through  strategic  partners.  We  have  also  been
pursuing  additional  verification  and  approvals  of  our  OEM  and
retrofit  applications,   such  as   the  recent   approval  of   our
technologies to supply  the Scottish  Government Emissions  Reduction
Register program.  Additionally,  we have been  enhancing our  global
sales organization with the appointment  of key personnel to  support
our anticipated growth, as well as a number of new initiatives on the
marketing front, including the launch  of our new corporate  website:
www.cdti.com."
 
"Our strategic license agreement with Hilite International, a leading
supplier of automotive powertrain components, represents an important
new distribution  partner  with  deep penetration  into  the  heavy-,
medium- and light-duty commercial vehicle and passenger car markets.
The license enables  Hilite to  utilize our  ARIS® airless  injection
technology  and  the  patented  combination  of  selective  catalytic
reduction (SCR)  with  exhaust  gas recirculation  (EGR),  to  reduce
oxides of nitrogen  (NOx) emissions  and to  optimize fuel  economy.
This agreement comes on  the heels of our  agreements with Bosch  and
Tenneco, and  provides further  validation  of our  global  licensing
strategy and intellectual property strength."
 
Dr. Steiner continued, "We have experienced strong product sales  and
revenue growth  directly related  to London's  LEZ legislation.   The
most recent compliance deadline for vehicles greater than 3.5  metric
tons occurred in July 2008 and Clean Diesel is now one of the leading
suppliers of  emission  control  technologies for  the  London  LEZ.
Although  direct  product  sales  are  more  capital  intensive  than
licensing  our   technology,  our   strategic  decision   to   obtain
certification and supply product  for the LEZ  program has proven  an
effective means of seeding the market as evidenced by the credibility
we have gained both in Europe and globally.  We believe this strategy
has opened the door to additional  markets for the technology, as  we
pursue our longer-term strategy  of licensing the technology  through
our global distribution partners.  This licensing strategy will  help
reduce our costs considerably in the next 18 months."
 
"With over 63 million diesel engines  on the road today, and over  11
million new engines going into service annually, diesel will continue
to play an important  role in on-road, as  well as off-road  markets.
 Moreover, we believe that Clean Diesel will support and enhance that
growth through  our fuel  efficient, emission-reduction  technology,"
concluded Dr Steiner.
 
Second Quarter 2008 Financial Results
 
Total revenue  for  the  second  quarter of  2008  was  $2.6  million
compared to $1.2 million in the second quarter of 2007. The  increase
in the second  quarter was primarily  due to sales  of the  company's
Purifier(TM)  System  as  an  emission  reduction  solution  to  meet
standards mandated for the London Low Emission Zone. Net loss for the
second quarter of 2008 was $2.1  million or $0.26 per share  compared
to $519,000 or $0.08 per share in the comparable period in 2007.  Net
loss for the quarter  included $238,000 of  non-cash charges for  the
fair value of  stock options  compared to $91,000  in non-cash  stock
option compensation expense in the three months ended June 30,  2007.
 The company also  recorded an  unrealized loss of  $164,000 for  the
second quarter of 2008 that reduced  the value of its investments  in
auction  rate   securities   with  a   corresponding   reduction   in
stockholders' equity.
 
Total revenue for the six months ended June 30, 2008 was $5.2 million
compared to $1.5 million  for the same period  in 2007. Net loss  for
the six months  ended June  30, 2008 was  $3.7 million  or $0.46  per
share compared to $2.3 million or  $0.37 per share in the  comparable
period in  2007. Net  loss for  the six  months ended  June 30,  2008
included $538,000 of  non-cash charges  for the fair  value of  stock
options compared to  $642,000 in non-cash  stock option  compensation
expense in  the six  months ended  June 30,  2007. The  company  also
recorded an unrealized loss of $750,000 for the six months ended June
30, 2008 that reduced  the value of its  investments in auction  rate
securities with a corresponding reduction in stockholders' equity.
 
The Company said that  its investment holdings  of $11.7 million  par
value of auction rate securities were through UBS Financial Services,
Inc. The Company understands from public statements that an agreement
in principle  has been  reached between  UBS and  certain  regulatory
bodies that may apply to these  holdings, but has not yet  determined
what the effect on the Company may be.
 
Additional information  about  the  Company's  financial  results  is
available on  its Form  10-Q  filed with  the Securities  &  Exchange
Commission: http://www.sec.gov.
 
About Clean Diesel Technologies
 
Clean Diesel  Technologies  (NASDAQ:  CDTI) is  a  cleantech  company
providing sustainable solutions to reduce emissions, increase  energy
efficiency and lower the carbon intensity of on- and off-road  engine
applications. Clean Diesel's patented technologies and products allow
manufacturers  and  operators  to  comply  with  increasingly  strict
regulatory emissions and air quality standards, while also  improving
fuel economy  and  power.  The  Company's  solutions,  which  are  in
commercial use worldwide,  significantly reduce  emissions formed  by
the combustion of  fossil fuels and  biofuels, including  particulate
matter (PM), nitrogen oxides (NOx), carbon monoxide and hydrocarbons.
Clean Diesel solutions also reduce carbon dioxide (CO2) emissions,  a
key greenhouse gas associated with global climate change.
 
Clean Diesel develops and manages intellectual property from original
concept to full-scale  commercial deployment.  Its offerings  include
ARIS® Selective Catalytic Reduction  (SCR); the patented  combination
of SCR  and  Exhaust  Gas Recirculation;  hydrocarbon  injection  for
emissions control  applications; Platinum  Plus® Fuel-Borne  Catalyst
(FBC); the Purifier(TM) family of particulate filter systems; and its
Wire Mesh  Filter particulate  filter technologies.  The Company  was
founded in  1995 and  is headquartered  in Stamford,  Connecticut.  A
wholly owned subsidiary, Clean Diesel International, LLC, is based in
London, England. For more information, please visit www.cdti.com.
 
Certain statements in this  news release constitute  "forward-looking
statements" within the meaning  of the Private Securities  Litigation
Reform Act of 1995. Such forward-looking statements involve known  or
unknown risks, including those detailed in the Company's filings with
the U.S. Securities and Exchange Commission, uncertainties and  other
factors  which  may   cause  the  actual   results,  performance   or
achievements of the  Company, or industry  results, to be  materially
different  from  any  future  results,  performance  or  achievements
expressed or implied by such forward-looking statements. Readers  are
cautioned not  to  place  undue  reliance  on  these  forward-looking
statements, which speak only as of the date hereof.
 
       Please visit us on the World Wide Web at: www.cdti.com
 
Contacts:
 
Crescendo Communications, LLC               Clean Diesel
(U.S. investor contact)                     Technologies, Inc.
David K. Waldman or Klea Theoharis          Ann Ruple
+1 212 671 1020                             CFO
cdti@crescendo-ir.com                       +1 203 327 7050
                                            aruple@cdti.com
 
Innovator Capital Limited                   Charles Stanley
(Financial press inquiries)                 Securities
Shaun Brown                                 Nominated Adviser
Jade Summer                                 Philip Davies / Freddy
+44 20 7297 6840                            Crossley
jade.summer@innovator-capital.com           Tel: +44 20 7149 6457
 
Matter Communications
(Technical press inquiries)
Jacqueline Volovich
+1 415-984-6281
jackie@matternow.com
 
To read the complete press release including tables please click the
following link:
 
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Clean Diesel Technologies, Inc.
300 Atlantic Street, Suite 702 
Stamford, CT  USA
 
WKN: 898074; ISIN: US18449C1045; 
Listed: Xetra Stars in Frankfurter 
Wertpapierbörse;