The Hiroshima-based carmaker said it expects to sell at least 130,000 units a year of the model, called Mazda2 outside Japan, globally, excluding those to be built at a joint venture plant in China. Of the total, 60,000 will be sold in Japan.

"This car is going to serve a very important purpose of building momentum for our new mid-term business plan," Chief Executive Officer Hisakazu Imaki told a news conference. Under that plan, Mazda, owned one-third by Ford Motor Co., is aiming to lift operating profit by more than 27 percent in the four years to March 2011 through further product-led growth, accelerated cost cuts and stepped-up synergies with its U.S. partner.

The original Demio ignited Japan's subcompact race with its debut in 1996, inspiring similar products such as Toyota Motor Corp.'s Vitz/Yaris and Honda Motor Co.'s Fit/Jazz. Cumulative global sales for the Mazda2/Demio, the carmaker's top seller in Japan and last redesigned in 2002, reached 1.04 million in May, it said.

Mazda said it hoped to broaden the Mazda2's appeal to young women and Japan's burgeoning population of empty nesters. The car, which shed about 100 kg (220 lb) against the previous generation and improved fuel economy by 20 percent, starts at 1.125 million yen (US$9,170) in Japan, comparable to higher-end minivehicles.

Excluding 660cc minivehicles, Mazda's sales in Japan contracted 11 percent in the first half of this year, mirroring a slump in overall demand. Demand for subcompacts has been especially hard hit as automakers began packing more features into cheaper minivehicles.

The third-generation Mazda2, co-developed with Ford and first shown at the Geneva auto show in March, will hit showrooms in Australia, Europe and other markets in the coming months but will not be sold in North America, Imaki said.