has reached an agreement to purchase the Mazda distribution business in the UK
from MCL Group Limited, a company owned 60 percent by Itochu Corporation and 40
percent by Inchcape plc. The agreement is subject to the approval of the European
Commission and is expected to take effect August 1.

"This agreement is an important step toward maximising our growth strategy",
said Jan Brentebråten, President of Mazda Motor Europe.

"The UK car market is the second largest in Europe and we already have
more than 300,000 customers there", Brentebråten added. "Through
investments in our distribution network and through our products and marketing
actions, we are confident that we can develop the Mazda brand and increase our
volume and share over the next five years."

Mazda has established a new wholly owned subsidiary company, Mazda Motors
UK Limited. It is hoped that the new subsidiary will reduce cost, improve efficiency
and maximise synergies with other Mazda operations.

"Mazda recognises and appreciates the contribution that the current distributor,
Mazda Cars (UK) Limited has made to our business in the UK, over nearly 30 years",
Brentebråten said. "We are also pleased to announce that we have
concluded agreements with their holding company, MCL Group, to provide a number
of automotive services to our new company. Mazda and the MCL group are planning
a smooth transition and look forward to a mutually beneficial relationship".

Automakers in Europe are currently reviewing their distribution arrangements
ahead of the expected end of ‘block exemption’ from 2002.

In April Mazda acquired the distribution business in France from Inchcape plc.
Mazda also established wholly owned sales companies in Spain and Italy during
2000. Mazda has been the distributor in Portugal since 1995 and has successfully
operated as a distributor in Germany, Europe’s largest market, for many years.

In the UK, around 155 British Mercedes-Benz dealers have launched legal action
against DaimlerChrysler UK over the termination of their franchises. Last December,
the dealers were given a year’s notice that they would lose their franchises
in a major restructuring of the UK M-B sales and service operation.

UK vehicle distributors and their dealer networks will lose the European Union
‘block exemption’, which permits exclusive dealer-distributor franchise agreements,
in September 2002 and Mercedes-Benz UK, apparently anticipating the new legislation,
has taken the controversial action of terminating its current dealer network.

Though it has yet to make an official announcement, M-B UK is understood to
be planning a new ‘hub’ network of 11 large, mostly company-owned ‘Experience
Centres’ to sell its vehicles, supported by smaller service centres, only some
of which would be recruited from the current network of full-service Mercedes

To view related research reports, please follow the links

world’s car manufacturers: A financial and operating review

regional report: Western Europe