B-Series trucks, produced by AAT in Thailand, have been well received in the local market. In the first phase of expansion efforts, AAT began exporting this model to Australia and New Zealand in December 1998.

During fiscal 1999, demand in Asia remained below previous year levels for the second consecutive year due to the continued effects arising from the stagnant regional economies. Mazda retail sales in Asia during the term were affected significantly as were other manufacturers' models. However, some countries such as Singapore and Hong Kong showed a positive performance.

In Thailand, which is one of the most important markets in Asia, we obtained majority equity ownership of SMC, a local distributor, and changed the name to Mazda Sales (Thailand) Co., Ltd. in March 1999. The company, sharing the backyard operations of Ford Sales (Thailand) Co., Ltd., including the warehousing of parts and vehicle and parts logistics, will operate under a more streamlined business structure with a greater focus on marketing and sales, customer support and dealer service. Our B-Series pickup model, produced by AAT, a joint venture between Mazda and Ford, has been well received in the local market and noted for its quality. Exports were initiated on a full-scale basis to Australia and New Zealand in November 1998, with plans calling for further export to other Asian countries, Europe, Latin America and Africa.

The new 323, introduced in Asia, Oceania, the Middle East and other regions during fiscal 1999 as the core model of Mazda's product lineup, is expected to contribute to retail sales increases

In Asia, Mazda will strive to improve its market share, while increasing customer satisfaction and strengthening the financial structure of the local dealerships and assembling companies. Further sales expansion will also be emphasized in such markets as Thailand, Taiwan and Hong Kong.

In Oceania, Mazda retail sales dropped. This decline was primarily due to a decrease in sales in Australia to 27,001 units. In New Zealand, however, Mazda retail sales increased 2.6% to 2,729 units despite a decline in industry demand affected by the currency crisis in Asian countries. In the coming years, B-Series pickup trucks and the introduction of the new Premacy and MPV models is expected to contribute to sales expansion in Oceania.

In the Middle East, retail sales declined 4.1% to 42,272 units. In Israel, despite a weak market trend Mazda posted a 3.0% increase to 16,564 units, as well as maintained the largest market share among other auto manufacturers for the third consecutive year and CS No.1 position for the second consecutive year. In Gulf Cooperation Council (GCC) nations, backed by a strong local market demand coupled with the positive effects of a fleet sales promotion program and favorable yen currency exchange rates, Mazda increased retail sales 21.8% to 10,869 units. In Turkey, the Russian economic crisis severely affected the local textile industry; combined with a weak local currency, market demand remained low, resulting in a decline of Mazda retail sales.

In South Africa and Zimbabwe, major markets for Mazda in Africa, demand remained less than favorable due to weak local currencies.

Industry demand in Latin America underwent a slight increase during fiscal 1999, partially impacted by a slump in demand in the Brazilian market. In Colombia and Venezuela, Mazda and Ford are undertaking strategic alliances to maximize operational efficiencies. In Colombia, Compañía Colombiana Automotriz S.A. (CCA), the assembly base of Mazda brand vehicles in Colombia, is producing a Ford model to be distributed through Ford of Colombia. Ford of Venezuela, the assembly base of Ford brand vehicles in Venezuela, in turn produces Mazda B-Series pickup trucks to be distributed by Vehiculos Mazda de Venezuela, a subsidiary of CCA and a distributor of Mazda brand vehicles. These alliances will not only increase the efficiency of manufacturing capabilities of both companies but also are expected to strengthen market presence.