Mazda revamps mainstay Demio

Mazda Motor Corp. rolled out its fully revamped Demio compact Thursday, hoping that its best-selling car, remodeled for the first time in five years, will put the brakes on plunging domestic car sales.

Mazda is also banking on the new Demio to help it attain its midterm business target of selling 1.6 million vehicles worldwide in the 2010 business year, which ends in March 2011.

"Since its initial launch in 1996, the Demio's cumulative sales have exceeded 1 million and it has become one of Mazda's core models," Mazda Chief Executive Officer Kazuhisa Imaki said in Tokyo.

"The new Demio is an important strategic model that represents Mazda's brand identity," he added.

The most significant difference between the old and new Demio is the weight. The new, smaller model weighs 100 kg less, without sacrificing any structural strength.

The result is better fuel economy, the Hiroshima-based automaker said. Mazda claims the new Demio, with a sticker price between 1.13 million yen and 1.58 million yen, gets up to 23 km per liter compared with the older model's 19.2 km.

With plans to introduce the model in Europe, China and Australia, the Demio, which is known as the Mazda 2 overseas, represents a key part of the company's global strategy.

But despite the growing popularity of compacts in North America, Imaki said the company has no plans at present to market the Demio there.

Reflecting as well the pessimistic outlook for the domestic market, Mazda has set a 5,000-unit monthly sales target for the new model, which is 2,000 units lower than for the previous model.

"We are seeing a slump in demand for cars in the domestic market and I don't think it would be wise only to seek volume," said Masazumi Wakayama, a managing executive officer who oversees the domestic business at Mazda.

"It's important to balance the sales volume, profitability and the brand image of the product," Wakayama added.

Mazda isn't the only company suffering a setback in the domestic car market.

Recent data released by the Japan Automobile Dealers Association showed that sales of new vehicles, excluding minicars, in Japan in the first half of 2007 fell 10.5 percent from the previous year to a 30-year low of 1.79 million units.