The new 626 Sedan, exclusively designed for the North American market, has supported increases in AutoAlliance International, Inc.'s plant operation rate.

NORTH AMERICA

In the United States, during fiscal 1999, the economy continued to expand due to robust domestic demand supported by strong private consumption and business investment. Backed by this positive trend in the overall environment, the total industry demand for the term exceeded 16 million units.

Total retail sales of Mazda vehicles increased for the second consecutive year, rising 2.9% to 234,815 units. Sales increases of the new 626 and new B-Series pickup models launched in the fall of 1997, the new MX-5 Miata introduced in March 1998, and the new Protege released in October 1998, greatly contributed to this favorable result. Of particular note, the MX-5 Miata registered a 37% increase from the previous year. In commemoration of its 10th anniversary, a limited edition was released and has proved impressive.

Powerful and ruggedly dependable, B-Series pickup trucks are proving popular among our North American customers.

During fiscal 1999, the MX-5 Miata was listed on Automobie Magazine's 1999 "All-Stars" lineup as well as selected as the reader's choice for best entry-level sports car. Mazda Protege was voted "Best buy" by the U.S. Consumer Guide, and as the top-ranked compact sedan in the U.S. Consumer Reports. The new Protege was also ranked second regarding IQS improvement of all new models. New models industry-wide declined 6% while the new 1999 Protege improved by 7%.

Furthermore, through various measures, owner loyalty increased from 18% to 33% (based on the recent Maritz early buyer survey).

In Canada, industry sales remained flat during fiscal 1999, amounting to approximately 1.4 million units. Prospects for fiscal 2000 represent a marginal increase of 1.3%.Mazda's retail sales for fiscal 1999 increased to 30,165 units, up 5% over the prior fiscal year. The introduction of the new Protege in the latter half of the year supported an 18% increase in sales; the new MX-5 Miata, launched in March 1998, boosted sales by 37%.

The MX-5 Miata has received wide customer acclaim since its introduction in 1989. Earlier in the year, model production topped the 500,000 mark, making the MX-5 Miata the best-selling two-seat, lightweight, open sports car in the world.

Concordant to the positive prospects particularly in the United States, Mazda North American Operations (MNAO) will implement various measures in line with the global brand strategy based on its brand message, "Get in. Be moved." MNAO will also strive to meet the needs of target customers through the introduction of the new MPV and enhancement of the vehicle lineup through product modifications and improvements. The full-year contribution of Protege, introduced in fall 1998, will also be a contributing factor in fiscal 2000. Continued efforts will be made to enhance the sales organization, focusing mainly on increases in per dealer sales and greater earnings throughout the region.