[John Parker,  Executive Vice President]

Good afternoon everyone! Ni-hao-ma! It is a pleasure to be here in Beijing and to have this opportunity to introduce Mazda and its operations in China.

My colleague Ozaki-san – who will be appointed senior managing executive officer in charge of Mazda's China Strategy later this month – will give you an overview of our progress in China in a few moments. Before that, I'd like to give you a brief overview of Mazda's global progress.

Over the past two years Mazda has made dramatic strides forward around the world – we have refocused our brand identity, we have re-energized our business, and we have gained new respect from opinion-leaders around the world. Beginning in 2002, we launched four, new-generation models that represent two-thirds of our global sales – Mazda6, Mazda2, RX-8 and Mazda3. These new products have surprised and delighted consumers and enthusiasts around the world. And to our surprise and delight, these models have also won more than 140 prestigious global awards – including Car of the Year here in China for Mazda6. In fact, we now believe that over the past two years Mazda has won more awards than any other automotive brand in the world.

Even better, from our shareholders' point of view, we have seen steadily increasing profits at Mazda. By most measures, last year was our best year in a decade, with our sales up for the third consecutive year and our operating profit up 39 percent. Mazda has never been more competitive. And not a moment too soon, because we are still a relatively small company in a savagely competitive global market. We need all the strength we can muster. So when I say we are at full strength, you can take that to mean we are confident but not at all complacent. We're prepared to fight hard – and smart – to survive and move even further forward.

Before I tell you where we will go, let me tell you a bit about where we've come from.

Mazda was founded in 1920 in Hiroshima, which is still our home base. We have been major global car producer for nearly 40 years. Today Mazda-brand cars and trucks are sold in over 140 countries around the world. In addition to our main production facilities in Western Japan, we build cars at 15 overseas production sites. We directly employ 36,000 people around the world.

Our product-sales success in recent years has been equally widespread. Mazda has achieved strong growth in almost every market. In fact, Mazda was the world's fastest growing major auto manufacturer in 2003. Results in Europe have been exceptional: 26 percent growth last year. We set all-time sales records in the UK, Italy, Spain and Portugal. And strong growth continues this year. In the US, Mazda has recorded double-digit sales growth for the past eight months. In Canada, we are well on the way to set an all-time sales record during calendar year 2004. In Japan, we were able to increase sales and gain market share in a very tough market last year. And meanwhile, in Australia, new products drove us to an all-time sales record in 2003. We are on track for another record this year. Our recent results in China are also notable, which we will discuss further later in this presentation.

But listing all these results does not answer the key question. And that question is: How did we do it? What has powered Mazda's recent success? Well, I'm going to tell you. I'm going to share with you the secret of our success: A few years back, Mazda faced a fundamental question: why does the world need eight Japanese auto manufacturer? What can Mazda offer that is truly distinct from the others?

We knew there was – and is – no future as just another Japanese auto manufacturer. So we had to ask: Who are we at our best? At our best, Mazda has been able to deliver an exceptional touch of spirit, style and performance. The world has seen this in amazing sports cars like our MX-5. And in our rotary-powered racecar that won at Le Mans in 1991. And in the famous RX-7s. Mazda stands out for its stubborn commitment to innovation and excellence in engineering – a heritage symbolized by our four-decade struggle to perfect the rotary engine. And Mazda stands out for its record of putting an extra measure of value within reach of our customers.

But how could we focus all this? How could we put this "Mazda magic" in every product we make? The starting point was an effort to focus everyone at Mazda on the same goal: to develop products that embody the true essence of Mazda. We were able to distill this essence down to three key attributes: Stylish, Insightful and Spirited. Those terms were – and are – important, but they don't quite crystallize Mazda's essence in a way that can inspire customers and employees alike. Then we found it. The basic formula behind Mazda's brand DNA. It is, very simply: "Zoom-Zoom."

In developing our new-generation products, inside the company we have used this term Zoom-Zoom to focus all minds on a single goal. And it is the power of that focus that has driven our progress. Zoom-Zoom is the core of our brand promise and gives power to the Mazda brand. It is a very emotional concept, though, and even with excellent interpreters it's hard to explain. But I think this video will show you what we mean.

We believe this exhilarating feeling of motion is universal; that it speaks to every culture around the world. And we believe it will resonate powerfully with consumers here in China – a market where Mazda-brand cars already sell well.

Let me now introduce Kiyoshi Ozaki, who will provide an overview of our current status in China and our plans for the future...

[Kiyoshi Ozaki, Senior Managing Executive Officer, China Strategy]

Thank you very much, Parker-san.

As most of you know, Mazda6 received 2004 China Car of the Year, and I hope you also know by now, the Mazda6's hometown is Hiroshima, in western Japan. We are located further west than the other automakers, so we are geographically closest to China. I have been interested in China for many years, as my hobbies include "IGO" and "MAHJONG", both of which originated in China. To play these games well, a person needs to be strategic and insightful, so for me these games will never be boring. These games fascinate me, and I feel a sense of awe towards the Chinese forefathers who invented them.

I frequently visit China now, and every time I seem to discover something new about this great country. As a neighbor of China, I thought I knew your history and culture, but I was wrong. I often come across situations that make me realize how much more I have to learn. In the same way, Mazda still has much to learn about China, and China has much to learn about Mazda. And since we are close physically, I am sure we can further deepen our understanding of each other through frequent visits and exchanges.

I'd like to begin today with an introduction to our brief history in China. We first entered in this market in 1992, starting with the assembly of Mazda929 Wagon in Hainan and B series truck in Fujian. These two models were marketed with local brands Hipoca and Forta, respectively, through multi-brand dealers.

Mazda in China changed, though, in May 2001 when we launched the Mazda Premacy under the Mazda Brand name for the first time – working closely with FAW Hainan. Approximately a year later, again working with FAW Hainan, we launched the Mazda323. In April 2003, the Mazda6 was launched through a partnership with FAW Car Co., in Changchun.

Since the launch of those products, we have seen a significant increase in sales. Sales volume reached 10,000 units in 2001, and more than doubled to 23,000 units in 2002. Then in 2003, we sold more than 80,000 units, a 3.5 fold increase over the previous year. How did we achieve those results? Of course, the most significant factor was the rapid expansion of Chinese market, but there are other factors, I believe:

This year, we expect to sell 110,000 units in China, up 37 percent increase over 2003, an amount restrained by production capacity. We are also working to expand the dealer network in cooperation with FAW Group. We had 50 dealers at the end of 2002, and 100 dealers at the end of 2003. Currently, we are up to 144 dealers, which will be increased to 180 by year's end. The dealer network is actually expanding faster than expected, as many business people in China are wishing to become Mazda dealers. These dealers – all exclusively selling Mazda vehicles – comply with Mazda global brands requirements for showrooms appearance and after service systems. In the future, we will improve training for sales persons and reinforce after-sales service to improve customer satisfaction.

As Parker-san mentioned earlier, Mazda's recent progress has been driven by our global focus on "Zoom-Zoom." In line with this, we are planning increase our usage of Zoom-Zoom throughout China. Why do we believe this will work? From serving sophisticated Chinese customers around the world, we already have strong indications that it will. For example, in Canada – one of the Mazda's strongest markets around the world – the city of Toronto is home to 430,000 Chinese-Canadians. And Chinese customers in Toronto are among Mazda's biggest fans. Let me share with you some of their comments.

Strongly establishing our Zoom-Zoom identity in China is a fundamental task, as it will further distinguish us from all other automaker in a crowded marketplace. And China indeed is becoming a crowded marketplace, and one in which we hope to grow further. We are now finalizing our future strategy for China, and our plans include an effort to launch Zoom-Zoom in China as part of a brand management strategy. We intend also to establish a national distributor to expand and strengthen the sales network and acquire a production site that allows us to expand capacity in China.

As we build momentum with brand power, distribution and production capacity, we intend to increase our line-up to as many as eight models over the next three to four years. And through these efforts, we will create a base to sell 300,000 vehicles in 2010.

As we grow in China, we earnestly hope that Mazda will be accepted by the Chinese people as an automaker that can meet their needs. We know we must offer products of high quality and provide substantial services, in conjunction with partners, to all our customers. We will improve customer satisfaction, produce more employment, and proactively address environmental problems. If we fulfill these promises, we believe Mazda will be accepted as a good corporate citizen, with our feet firmly fixed here in China, a partner in this growing economy. One of the first things we hope to do is begin bringing Chinese journalists to visit our facilities in Hiroshima. In fact, we invited some of the Chinese media to Hiroshima two years ago, in cooperation with our partner FAW, and it was a very valuable event for Mazda and the media.

Before concluding my speech, let me kindly remind you to visit the Mazda booth at Auto China 2004. At our press conference, we will offer an introduction to the Zoom-Zoom brand and show you vehicles never before seen in China: the Mazda RX-8 and the MX-5 Roadster, our two world-famous sports cars; and three concept models: MX-Micro Sport, Washu and RX-8 Hydrogen RE. The Hydrogen rotary is particularly exciting, as we understand the importance of environmental issues in all markets, including China. I'm sure you will find this interesting.

We have a saying in Japan – "Seeing is believing". Once you take a look at our products, I'm sure you will have a better understanding of Mazda, and how we are indeed different from all our Japanese competitors. We are the Zoom-Zoom company.

Thank you for your kind attention.