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                                                                       EXHIBIT 4


     SECOND AMENDMENT, dated as of February 27, 1998 (this "Amendment"), to
that certain Credit Agreement (the "Credit Agreement") which became effective
pursuant to the terms of the Termination, Replacement and Restatement Agreement
dated as of June 7, 1995 (the "Restatement Agreement"), among DETROIT DIESEL
CORPORATION, a Delaware corporation (the "Borrower"), the several banks and
other financial institutions parties thereto (the "Lenders") and Chemical Bank,
a New York banking corporation, as agent for the Lenders and the predecessor in
interest of The Chase Manhattan Bank, a New York banking corporation, now
acting as agent for the Lenders (in such capacity, the "Agent").

                                  WITNESSETH:

     WHEREAS, the parties hereto originally entered into a credit agreement
(the "Original Credit Agreement"), dated as of January 7, 1994; and

     WHEREAS, the parties subsequently entered into the Restatement Agreement
whereby the Original Credit Agreement was terminated, subject to applicable
survival provisions, and simultaneously replaced by the Credit Agreement; and

     WHEREAS, pursuant to the Original Credit Agreement and the Credit
Agreement, the Lenders have agreed to make, and have made, certain loans to the
Borrower; and

     WHEREAS, the Borrower has requested, and, upon this Amendment becoming
effective, the Majority Lenders have agreed, that certain provisions of the
Credit Agreement be amended in the manner provided for in this Amendment.

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     I.    DEFINED TERMS. Except as otherwise specifically defined herein,
capitalized terms defined in the Credit Agreement and used herein and therein
shall have the meanings given to them in the Credit Agreement. References to
sections and subsections in this Amendment shall be to the Credit Agreement.

     II.    AMENDMENTS TO CREDIT AGREEMENT.

            A. Amendments to Section 1. Subsection 1.1 of the Credit Agreement
is hereby amended by (i) deleting the definition of "Reportable Event" contained
therein and (ii) inserting in their correct alphabetic order the following new
definitions:

           "'Reportable Event': any of the events set forth in Section 4043 of
      ERISA, other than those events as to which the thirty day notice period
      is waived under subsections .22, .23, .25, .27, .28, .29, .31 or .32 of
      PBGC Reg. Section  4043.



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           "'Second Amendment Effective Date': the date on which the conditions
      to effectiveness of the Second Amendment, dated as of February 27, 1998,
      to this Credit Agreement have been satisfied."

           "'Total Basket Amount': the sum of the following amounts:

           (a) the aggregate outstanding principal amount of all Indebtedness
      secured by Liens permitted under Section 7.2(g);

           (b) the aggregate amount of Attributable Debt under Section 7.3(b);
      and

           (c)   the aggregate outstanding principal amount of all Indebtedness
      of all Subsidiaries, excluding (i) the Excluded Indebtedness, and (ii)
      for so long as the applicable Subsidiary Guarantee remains in effect,
      Indebtedness for which the Subsidiary executes and delivers (A) a
      Subsidiary Guarantee in favor of the Agent for the benefit of the
      Lenders, substantially in the form of Exhibit I, and (B) as reasonably
      requested by the Agent, one or more certificates, resolutions and
      opinions of counsel, in each case, in form and substance reasonably
      acceptable to the Agent."

     B. Amendments to Section 4. Section 4 of the Credit Agreement is hereby
amended by deleting in its entirety Section 4.12 thereof and substituting in
lieu thereof a new paragraph to read as follows:

           "4.12 ERISA. Neither a Reportable Event nor an "accumulated funding
      deficiency" (within the meaning of Section 412 of the Code or Section 302
      of ERISA) has occurred during the five-year period prior to the date on
      which this representation is made or deemed made with respect to any
      Plan, and each Plan has complied in all material respects with the
      applicable provisions of ERISA and the Code and any applicable
      regulations thereof. No distress termination (as provided in Section 4041
      of ERISA) and no termination as provided in Section 4042 of ERISA of a
      Single Employer Plan has occurred, and no Lien in favor of the PBGC or a
      Plan has arisen, during such five-year period. The present value of all
      accrued benefits under each Single Employer Plan maintained by the
      Borrower or any Commonly Controlled Entity (based on those assumptions
      used to fund the Plans and calculated in accordance with FASB 35) did
      not, as of the last annual valuation date prior to the date on which this
      representation is made or deemed made, exceed the value of the assets of
      such Plan allocable to such accrued benefits. Neither the Borrower nor
      any Commonly Controlled Entity has had a complete or partial withdrawal
      from any Multiemployer Plan such that such entity by virtue of such
      withdrawal became subject to any material liability under ERISA, nor does
      the Borrower nor any Commonly Controlled Entity presently intend to
      completely or partially withdraw from any Multiemployer Plan such that
      such entity would thereby become subject to any material liability under
      ERISA, and neither the Borrower nor any Commonly Controlled Entity would
      become subject to any material liability under ERISA if the Borrower or
      any such Commonly Controlled Entity were to withdraw completely from all
      Multiemployer Plans as of the valuation date most closely preceding the
      date on which this representation is made or deemed made. No such
      Multiemployer Plan is in Reorganization or Insolvent. There is no pending
      or, to the best of the Borrower's


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      knowledge, threatened litigation or investigation questioning the form or
      operation of any Plan nor is there any basis for any such litigation or
      investigation which if adversely determined could have a Material Adverse
      Effect."

      C. Amendments to Section 7. Section 7 of the Credit Agreement is hereby
amended as follows:

           1. by deleting in its entirety paragraph (g) of subsection 7.2
thereof and substituting in lieu thereof a new paragraph to read as follows:

           "(g) Liens not otherwise permitted hereunder which secure
      Indebtedness in an aggregate principal amount at any time outstanding if,
      after giving effect thereto, the Total Basket Amount does not exceed 40%
      of Net Worth at such time."

           2. by deleting in its entirety subsection 7.3 thereof and
substituting in lieu thereof a new subsection to read as follows:

           "7.3 Limitation on Sales and Leasebacks. Enter into any
      Sale/Leaseback Transaction (a) other than the Sale/Leaseback Transactions
      in existence on the Second Amendment Effective Date and listed on
      Schedule 7.3 (and any replacements thereof on comparable terms) or (b)
      unless (i) after giving effect thereto, the Total Basket Amount does not
      exceed 40% of Net Worth at such time, (ii) immediately before and
      immediately after giving effect to such transaction, no Default or Event
      of Default shall have occurred and be continuing and (iii) the gross sale
      proceeds received by the Borrower or the selling Subsidiary are not less
      than the subject property's fair market value at such time, as determined
      by the Board of Directors of the Borrower or such Subsidiary."

           3. by deleting in its entirety the subsection 7.7 thereof and
substituting in lieu thereof a new subsection to read as follows:

           "7.7 Limitation on Subsidiary Indebtedness. Permit any Subsidiary to
      create, incur, assume or suffer to exist any Indebtedness (other than (i)
      Indebtedness of such Subsidiary to the Borrower or any other Subsidiary,
      (ii) and Indebtedness secured by Liens permitted under subsection 7.2 and
      (iii) Indebtedness of such Subsidiary that is supported by the Italian
      Letter of Credit (collectively, "Excluded Indebtedness")) if, after
      giving effect thereto, the Total Basket Amount would exceed 40% of Net
      Worth at such time."

      III. Conditions to Effectiveness. This Amendment shall become effective on
the date (the "Second Amendment Effective Date") on which the Borrower, the
Majority Lenders and the Agent shall have executed and delivered to the Agent
this Amendment.

      IV. General.

      A. Representations and Warranties. In order to induce the Agent and the
Lenders parties hereto to enter into this Amendment, the Borrower hereby
represents and warrants to the Agent and all of the Lenders as of the Second
Amendment Effective Date that the representations
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and warranties made by the Borrower in the Credit Agreement are true and
correct in all material respects on and as of the Second Amendment Effective
Date, before and after giving effect to the effectiveness of this Amendment, as
if made on and as of the Second Amendment Effective Date (it being understood
and agreed that any representation or warranty which by its terms is made as of
a specified date shall be required to be true and correct in all material
respects only as of such specified date).

     B. Payment of Expenses. The Borrower agrees to pay or reimburse the Agent
for all of its reasonable out-of-pocket costs and expenses incurred in
connection with this Amendment, including, without limitation, the reasonable
fees and disbursements of counsel to the Agent.

     C. No Other Amendments Confirmation. Except as expressly amended, modified
and supplemented hereby, the provisions of the Credit Agreement and the Notes
are and shall remain in full force and effect.

     D. Governing Law: Counterparts. 1. This Amendment and the rights and
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.

     2. This Amendment may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Amendment signed by all the parties shall be lodged with
the Borrower and the Agent. This Amendment may be delivered by facsimile
transmission of the relevant signature pages hereof.

        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.


                                DETROIT DIESEL CORPORATION
                                By:  /s/ Daniel J. McEnroe
                                Name:       Daniel J. McEnroe
                                Title:      Treasurer



                                THE CHASE MANHATTAN BANK, as Agent, as
                                Issuing Bank and as a Lender
                                By:  /s/ Andris E. Kalnins
                                     Name: Andris E. Kalnins
                                     Title: Vice President

                                BANK OF AMERICA NT&SA
                                (formerly known as Bank of America
                                Illinois)
                                By:  /s/ Steven K. Ahrenholz
                                     Name: Steven K. Ahrenholz
                                     Title: Vice President




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                                BANK OF MONTREAL
                                By:  /s/ L. Durning
                                     Name: L. Durning
                                     Title: Portfolio Manager
                                
                                THE BANK OF NOVA SCOTIA
                                By:  /s/ F.C.H. Ashby
                                     Name: F.C.H. Ashby
                                     Title: Senior Manager Loan Operations
                                
                                CIBC INC.
                                By:  /s/ Stephanie Johnson-Devane
                                     Name: Stephanie Johnson-Devane
                                       Title: Executive Director, CIBC
                                       Oppenheimer Corp., as agent
                                
                                CITIBANK, N.A.
                                By:  /s/ Brian Ike
                                     Name: Brian Ike
                                     Title: Attorney-In-Fact
                                
                                COMERICA BANK
                                By:  /s/ Andrew R. Craig
                                     Name: Andrew R. Craig
                                     Title: Vice President
                                
                                CORESTATES BANK, N.A.
                                By:  /s/ S. Scott Gates
                                     Name: S. Scott Gates
                                     Title: Vice President
                                
                                CREDIT LYONNAIS CHICAGO BRANCH
                                By:  /s/ Kent S. Davis
                                     Name: Kent S. Davis
                                     Title: Vice President
                                
                                DG BANK
                                DEUTSCHE GENOSSENSCHAFTSBANK DG
                                By:  /s/ Pamela Ingram
                                     Name: Pamela Ingram
                                     Title: Assistant Vice President
                                By:  /s/ Robert B. Herber
                                     Name: Robert B. Herber
                                     Title: Vice President
                                
                                FIRST UNION NATIONAL BANK
                                (formerly known as First Union National


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                                Bank of North Carolina)
                                By:  /s/ Jorge Gonzalez
                                     Name: Jorge Gonzalez
                                     Title: Senior Vice President
                                
                                NATIONSBANK, N.A.
                                By:  /s/ Valerie C. Mills
                                     Name: Valerie C. Mills
                                     Title: Vice President
                                
                                NBD BANK
                                By:  /s/ William H. Canney
                                     Name: William H. Canney
                                     Title: Vice President
                                
                                THE SUMITOMO BANK, LIMITED
                                By:  /s/ John C. Kissinger
                                     Name: John C. Kissinger
                                     Title: Joint General Manager
                                
                                WELLS FARGO BANK, N.A.
                                By:  /s/ John Hukari
                                     Name: John Hukari
                                             Title: Assistant Vice President