Mazda Europe expects Russia to become its third largest market by the end of next year following anticipated growth of 124 percent in 2005 to some 25,000 vehicles.

This is expected to grow to more than 30,000 in 2006 putting Russia behind Germany and the UK according to sales vice president Phil Waring. "There is huge potential in Russia," he added. "Then you are looking at Belorussia and even the 'Stans'."

Mazda Europe is currently looking at how to formalise its sales operations in Russia and expects to make a decision next year on whether to use an independent distributor or set up a national sales company.

In recent years Mazda has been taking over independents in Europe in favour of NSCs but Waring said this was not a general rule.

In an interview at the European launch of the new Mazda MX-5 in Portugal, he added: "We look at each country on its merits, we have some very good distributors in places like Belgium, the Netherlands, Finland, Greece and the Baltics."

Mazda Europe is currently establishing an NSC in Ireland where it is taking over from Mazda Distributors Ltd, part of Flaherty Holdings.

The next big European market Mazda is looking at is Poland. "We have no distribution set up there now and it is obviously going to be a large and sophisticated market so we are looking to move our operations there forward," added Waring.

In five years time Mazda Europe would like to see sales in the region top 450,000 a year, Waring said, up from around 300,000 this year and 325,000 in 2006.

"I want to see steady growth, we have strong products and there is no need to do anything that will distress these products. We do need to increase our 2,000-strong dealer network, however."

Waring said that finding new dealers for major European cities was an issue because for the cost of real estate to partners. His said there were no plans, however, to establish Mazda-owned retail outlets in these areas.

"We have to be more creative, I think we (Mazda) do a great job of designing, building and delivering cars but we are not retailers. We just have to find the right business model for our partners.

"There are things to look at in terms of real estate costs - for example why does everything have to be at the same site - sales, service and parts. Why do dealers have to keep all vehicle and parts stock on their most expensive real estate?"

Waring said that he is happy dualling with other manufacturers. "There are obviously opportunities within the Ford group but I would not rule out being alongside any other franchise provided the partner can do a good job and the staff are dedicated.

"Dealer staff have to be totally focussed on our brand - it has to be the one that pays their mortgage."

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