Mazda will begin production of its next-generation Demio supermini at a Ford of Europe factory in April 2002.
The Japanese carmaker will also begin European production of its next-generation 323 five-door hatchback in Europe in 2003. Both cars will share a multi-functional platform with Ford models.
Total Mazda volume in Europe will be about 100,000 units.
To gain the capacity, Mazda will close its U2 plant in Hiroshima. That will gain Mazda 266,000 units.
Neither Ford nor Mazda will name a European production site. Ford makes its Fiesta supermini at Cologne, Germany, and Dagenham, England, and its Ka mini in Valencia, Spain. The lower-medium Focus is made at Saarlouis, Germany, and Valencia.
'[The production site] won't be the Dagenham plant,' said Tetsu Owari, spokesman for Mazda Europe.
Mazda used to build the 121, a re-badged Ford Fiesta, at Dagenham.
Valencia could be a candidate because it is the only Ford plant making cars off two platforms and because it has more capacity leeway than other Ford factories, said Nigel Griffiths, analyst for Standard & Poor's DRI.
Griffiths predicts a Ford Fiesta-based multi-purpose vehicle will be built starting in late 2002 that could share the platform with Demio.
Mazda wants to move production to Europe to combat currency fluctuations.