Japan

Total cumulative production of the Demio, which has been especially well received in the Japanese market, will reach 250,000 units in September 1998.

In fiscal 1998, domestic industry sales totaled 6.3 million units, down by 13.9% from fiscal 1997. This was the first double-digit year-on-year decline in 23 years. The main reason for the decrease was a sharp drop in spending by both consumers and corporations, undermined by a general lack of confidence in the Japanese economy.

   Retail sales of Mazda vehicles totaled 321,500, representing a market share of 5.1%, up 0.3 percentage points from fiscal 1997. Key factors contributing to this increase included concerted efforts to strengthen dealership performance and enhance customer service supported by active sales of the Capella series (626), Demio and Roadster (MX-5/MX-5 Miata) vehicles.

   Sales of the Demio, an optimum-efficiency, multi-purpose compact vehicle launched in 1996, were over one and a half times the original target. The Demio has established a firm position within its segment, maintaining positive sales since its launch two years ago.

   Mazda introduced three new models during fiscal 1998. The Capella Sedan, a core model in the Mazda lineup, went on sale in August 1997, followed by the Capella Wagon in November. The newly remodeled Roadster, one of the world's best-selling sports cars, gave Mazda a successful start to the year with its debut in January 1998.

A progressive initiative underscored by top management to extend the Sales Expansion Project in Japan is targeting customer satisfaction and dealer efficiency.

   Governmental economic stimulus measures are expected to begin to take effect in the second half of fiscal 1999, but are likely to have a relatively small impact until the following year. Accordingly, Mazda expects a decline of 6 to 8% in total domestic demand in the period.

   In fiscal 1999, Mazda will benefit from full-year sales of the new models mentioned above. The full-model change Familia (323, 323F/Protege), launched in June 1998, has been very well received and is also expected to boost sales.

   Mazda will increase sales of passenger cars through the extension of the Sales Expansion Project. The number of dealers taking part in the project has been increased from 56 to 84 in Summer 1998. Plans to augment the Commercial Vehicle Project from 19 dealers to 28 were also initiated during this period.

   Mazda is targeting sales of 500,000 units, or 7% market share, in the medium and long term. The achievement of this ambition will be based firmly on further improvements in customer satisfaction and brand image, combined with our efforts to increase sales efficiency by reinforcing sales processes and personnel training and the rationalization of product logistics.

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