The long awaited Mazda 2 (if you know the Mazda 2, previously known as Ford Fiesta, compact car by Mazda@Ford)
Mazda has named this model to be known as Demio, targeting a higher sale of 5,000 units per month compared with previous total sale of 1,040,000 units on its predecessor model in Japanese market. source
This model weight 100kg less targeted to have a 54mpg fuel efficiency while running a 1.3L MZR Miller-cycle engine with optional CVT.

As a replacement for the Demio, the compact five-door five-seater Mazda 2 came on the market in 2002 and had been proven quite a success since its first appearance – especially the European market has accepted the tiny Japanese from the very first moment. The car is now due for replacement, and our spy-shots show it’s going to have an even more European design when it hits our shores in summer 2007.

The newcomer is again based on the Ford Fiesta and again engines will be mounted transversely driving the front wheels. Our pictures show an early prototype during a test-drive in Germany. The pictured prototype still has some black tape concealing the major styling changes at front- and rear end.

Below is the press released copied from Mazda source:
Mazda Motor Corporation has announced the Japanese launch of the fully redesigned Mazda Demio (known overseas as the all-new Mazda2) which goes on sale at all Mazda, Mazda Anfini and Mazda Autozam dealers throughout Japan from today, July 5, 2007. The target sales volume for the all-new Demio is 5,000 units a month. Prices range from 1,125,000 to 1,580,000 yen (including tax).

The first generation Mazda Demio went on sale in August 1996. It heralded a new trend in the compact car segment for exceptional space and functionality in a conveniently compact vehicle. The second generation Demio improved on the characteristically Mazda-like driving dynamics and became a popular choice for many consumers. As of May 2007, the Demio had a total production volume in Japan of over 1,040,000 units and has become Mazda's biggest selling model in the Japanese market. The all-new third generation Demio was developed using a "personal smart commuter" concept, with the emphasis on emerging modern values such as increased concern for environmental and safety issues and a greater emphasis on design.

The all-new Demio offers driver-friendly functionality and packaging as well as individual styling that makes you want to get in and drive it. The design team aimed to inherit the fun-to-drive Zoom-Zoom DNA that is common to all Mazda vehicles and balance it with top class fuel economy, safety performance and comfort levels. By completely redesigning the body and chassis, the new Demio is around 100 kilograms lighter than the previous model*. The Demio 13C-V grade combines Mazda's newly developed, naturally aspirated MZR 1.3L Miller-cycle engine with continuously variable transmission (CVT) to achieve top class 10-15 mode fuel efficiency of 23.0 km/L (rated by Japan's Ministry of Land, Infrastructure and Transport [MLIT]). This represents an improvement of approximately 20 percent over the previous model*. All model grades also offer superb environmental performance, with emissions at least 75 percent lower than Japan's 2005 standards.

Mazda's Representative Director, Chairman of the Board, President and CEO, Hisakazu Imaki, said, "The all-new Mazda Demio is a core global model and it is intended to accelerate our progress toward achieving the objectives set out in the Mazda Advancement Plan, our new mid-term plan announced in March of this year. Furthermore, this is our very first product that embodies "advanced Zoom-Zoom", offering harmony between driving pleasure and environmental and safety features, based on our long-term technology development vision, 'Sustainable Zoom-Zoom.' At Mazda, we will continue to drive our business forward through product-led growth and, at the same time, enhance our efforts to develop environmental and safety technologies to help realize a sustainable future."

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