Though it does not call the new model a 'hybrid', Mazda Motor Corporation has added three petrol/electric-powered four-wheel-drive (e-4WD) models to its Demio compact car lineup (the domestic-market equivalent of the export 2) and updated the rest of the range. The new range is now on sale through the Mazda, Mazda Anfini and Mazda Autozam dealer networks.

The Demio e-4WD system uses a motor powered by a dedicated generator to drive the rear wheels. Available on 1.3-litre and 1.5-litre petrol-powered models, the compact electronically-controlled system responds to road conditions by engaging four-wheel drive when necessary on slippery surfaces.

With four-wheel drive mode selected, the motor drives the rear wheels as soon as the accelerator is depressed, which is claimed to reducing the time lag and provide a smoother engagement of 4WD and start than mechanical systems. The system also detects front wheel slippage and automatically adjusts rear wheel torque accordingly. Together with front-wheel traction control, the e-4WD system works to minimise front-wheel slip for stable driving on slippery road surfaces and when climbing hills or accelerating from a standing start.

Mazda claims that cabin space and luggage room are equal to that of the front-wheel drive models becuase the e-4WD system is compact and eliminates the propeller shaft and transfer gearbox required for a mechanical system.

In 4WD mode, when no slippage is detected and when the vehicle has reached a constant speed, the e-4WD system disengages the electromagnetic clutch on the rear wheel drive unit and only powers the front wheels.

 A dashboard switch allows the driver to select front-wheel drive when additional traction is not required, thereby providing better fuel efficiency than mechanical four-wheel drive systems. The system also automatically switches to front-wheel drive when appropriate.

The new 4WD models (there are three trim levels) comply with Japan's 2010 fuel efficiency standards and qualify as ultra-low emission vehicles. Cars registered by March 31, 2004 are eligible for a 32,000-yen tax reduction (automobile acquisition tax 15, 000 yen, automobile tax 17,000 yen) under the country's Green Tax plan.  Demio e-4WD prices start at 1.33 million yen.

Mazda has also updated the other models in the Demio range with restyled tail lamps and new exterior and interior colours.

The monthly sales target for the Demio line in Japan is 7,000 units.