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First Auto Works and Mazda Motor Corporation Gain Government Approval for Joint Venture Distribution Company in China

- Mazda to further strengthen sales distribution in China and bring the Zoom-Zoom experience to Chinese customers -

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BEIJING, China – Mazda Motor Corporation, First Auto Works (FAW) and FAW subsidiary FAW Car Co. Limited (FCC) jointly announced today in Beijing that the Chinese central government has granted approval to establish a joint-venture national sales company to distribute Mazda-branded products in the Chinese market. The new sales company will commence operations in early March 2005 and be headquartered in the city of Changchun, in northeast China, where FAW’s head office is located.

The new company, FAW Mazda Motor Sales Co., Ltd. (FMSC), will start with 100 million yuan (1.4 billion Japanese yen) and FCC, Mazda, and FAW will take stakes of 70 percent, 25 percent and 5 percent, respectively.

The chairman of the board and vice president of the new company will be appointed by FAW; Mazda will appoint the vice-chairman of the board and president. The new company will have sole distribution rights to all future Mazda-branded vehicles to be produced and launched in China-including the current Mazda6.

“ This joint venture is a landmark cooperative business undertaking between two major companies,” said Mr. An De Wu, Vice-President of FAW. “FAW is a leading company in the expanding Chinese automotive market, with an extensive dealership network and ample experience. Mazda has cutting-edge marketing and sales know-how as a major player in the global automotive business. This joint venture will enhance FAW’s international competitiveness and will have a tremendous impact on the competitive structure of the mid- and compact-passenger vehicle market in China,” he said.

“Mazda continues to construct a system to achieve our mid-term goal of producing and selling 300,000 units in the Chinese market by 2010,” said Mr. Kiyoshi Ozaki, Director and Senior Managing Executive Officer in charge of Mazda’s China operations. “This new joint venture is a very significant step forward for Mazda’s expansion of its production base in China and is one of our major strategies to achieve our targets. We have a deep interest in strengthening our partnership with the FAW group, one of our valuable partners in China, and build on the great relationship we have already developed with them. We plan on a unified and consistent marketing and sales strategy to expand our dealership network and achieve efficiencies. In providing Mazda’s globally recognized products and top quality service to ensure the satisfaction of our Chinese customers, this shows our desire to strengthen the Mazda brand in this key market.”

Mazda has shown explosive growth in production and sales since it started full-scale operations in the Chinese market in May 2001. Mazda’s China sales were 22,979 units in 2002, (up 123 percent from the previous year), followed by 80,075 units in 2003 (up 248 percent). Amid slower growth in the passenger vehicle market in China and intensified competition, FAW Car Company Ltd. in Changchun and FAW Haima Automobile sold 97,132 units, an increase of 21 percent compared with the previous year. The FAW group and Mazda have spent nearly two years preparing this joint venture that is projected to expand the sales network and strengthen the Mazda brand in the highly competitive and growing Chinese market.