As of 2005, 892,000 Demios had been sold worldwide since introduction.
In the 1980s Ford approached Mazda to create a B-segment small car for it. This resulted in the introduction of the 1987 Ford Festiva. The same platform spawned the Autozam Revue in 1990, which Mazda sold as the 121 in most markets. Then the Festiva was redesigned in January 1993, still based on the same platform. Kia also built versions of the first and second Festiva, both for itself and for Ford's sale in the United States (Kia Pride and Kia Avella).
When it came to redesigning the Revue, Mazda came up with a tall hatchback, minivan-esque package (the Revue was already over 1500mm (59.1in) tall). Introduced in a time full of negative press coverage, the Demio became a surprise hit for Mazda in Japan, and also foreshadows the current crop of B-segment minivans such as the Opel Meriva, Fiat Idea and the Renault Modus.
The new 1996 Demio (sold as either the Demio or 121 outside Japan, or Metro in Australia) used the DW platform. Production started in July 1996. The Demio was updated for 2000 with a revised exterior, cabin air filtration, retuned automatic transmission, and available DSC due to a 2002 redesign. It was also sold in Japan as the Ford Festiva Mini Wagon.