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Mazda stays loyal to Japanese plants despite savings potential in Europe

Mazda will not expand European production despite major cost savings generated by building the Demio replacement, to be badged Mazda 2, in Valencia, Spain, from early next year. According to Lewis Booth, who replaces Mark Fields as company president in July, Mazda superminis produced at Ford's Spanish plant will cost £800 less per unit to build than Japanese-sourced cars.

The savings come from reduced currency exchange exposure relating to the Yen, cash flow benefits from eliminating three months' sea transit, and avoidance of European Union import tariffs. Despite this, the 323 replacement - badged 3 - will be built in Japan.

Mazda's cost cutting strategy involves harnessing cheaper Asian components supplies, particularly from China, which will lift the share of non Japanese parts from 17 per cent to 25 per cent. The company, 33.4 per cent owned by Ford, spends up to £7bn a year on components. The Mazda 2 will use the Fiesta's 1.4-litre TDCi diesel engine, developed jointly by Ford and PSA Peugeot-Citroen, to boost virtually non-existent European diesel sales. Meanwhile, Mazda - aiming to expand its UK dealership strength from 115 to 150, has no plans for large-scale leasing of properties to new retailers, according to its European president, Stephen Odell.

“There might be cases where we buy and lease property to enable us to fill open points. But I would rather invest in raising brand awareness than becoming landlords,” he says. Mazda is concentrating on re-establishing its presence in major conurbations like Birming- ham and London.

“It is not a case of weeding out dealers. Some of them naturally weed themselves out,” says Odell. “There are some who have been very loyal, but we have to balance loyalty with growth.”

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