When Mazda's 323 replacement arrives in Europe, it will not be made at Ford's assembly plant in Valencia, Spain, as originally planned.
Instead, Mazda will build its new lower-medium car, to be known as the Mazda3, in Hiroshima, Japan.
Mazda, still in the midst of a financial turnaround, changed its plans because it wants to develop a low-cost base for parts supply in China and southeast Asia.
'[Ford] set aside 100,000 units of capacity in Valencia,' said Robert Shanks, Mazda's chief financial officer. 'We're giving 60,000 back to them.'
Mazda will still make its next-generation Demio supermini in Valencia. Production will begin in early 2003 at a rate of 40,000 units per year, Shanks said. The car will probably be called the Mazda2.
Shanks said Mazda decided to move production of the Mazda3 back to Japan because of cost, and so it could concentrate on getting the launch of the Mazda2 right.
Mazda is launching the Mazda6 upper-medium model and a new minivan this year. Mazda does not want to strain its manufacturing and engineering resources with too many big projects at once.
Spokesman David Hunt said Ford would have no problem filling up the 60,000 spare units of capacity at Valencia.
As Ford's most flexible European plant, Valencia already makes the Ka, Focus and Fiesta.
Ford factories at Valencia and Saarlouis, Germany, are working 'flat out' on evenings and weekends to keep up with production of current Ford models, said Hunt. Saarlouis builds the Focus.
Mazda still has aggressive growth plans for Europe. It hopes to increase unit sales across the region from 150,000 in 2001 to 264,000 by 2004, the end of its five-year Millennium Plan, said Mark Fields, outgoing president. That makes Europe the market where Mazda plans to grow the most.
On July 1, Fields will move from Japan to London to become chairman of Ford's Premier Automotive Group of luxury brands, including Aston Martin, Jaguar, Land Rover and Volvo.
Taking Fields' place as Mazda president will be Lewis Booth, a native of Liverpool, England. In contrast to Fields, who came up through Ford's marketing side, Booth is an engineer and accountant.
Stephen Odell was appointed president of Mazda Motor Europe at the beginning of this year, replacing Jan Brentebraten, who became president of Ford of Sweden. Odell was previously executive vice president and chief operating officer of Mazda's North American operations.
In Europe, Odell said he wants Mazda to be regarded as the 'Japanese import with a twinkle in its eye.'
Several factors have hindered Mazda's growth in Europe, including import quotas on Japanese cars; the strength of the Japanese yen; lack of control of its distribution; and its inability to offer a modern diesel engine range.
Mazda has now developed its own common-rail diesel engine independent of Ford, which owns 33.4 percent of the Japanese carmaker.