Piaggio enters expansion phase, looks to hit a dealership count of 400

The firm is betting on its premium positioning and technological prowess to do the trick

In a market that is highly price sensitive and where two-wheelers are primarily mass market products, life was never going to be easy for a brand attempting a premium positioning. But Piaggio India credits itself for having created a consumer segment on that unlikely proposition and is confident future growth will come from that same unwavering resolve.

The company — which enters its seventh year since a return to India — believes it has successfully conveyed the message that its range of Vespa and Aprilia scooters stand out in the crowd and now is the time for consolidation and growth. The strategy to achieve this growth hinges on rapid territorial expansion, offering premium user experience to both new and existing buyers through world class facilities, better outreach, technology and customised solutions.

Having no direct competitor and a year-on-year growth of 50 per cent in the last financial year (2017-18) has left Diego Graffi, managing director and chief executive officer, Piaggio India, upbeat about the prospects of the company as it looks to hit a dealership count of 400 by the end of this calendar year, up from the 250 they currently have. “Vespa is one of the most recalled brands of scooters. In 2016, we introduced Aprilia which is different from what we had seen in the India market, a crossover between a motor cycle and a scooter. We are happy with the performance of both the products based on the consumer feedback from India. Between domestic sales and exports, we crossed one lakh products in 2018 which is close to our production capacity in India,” he says even as he adds that the company has no intention to enter the mass segment.  

So what exactly is its focus segment? “The so-called mass market or the commuter segment typically comprises the 110-cc market. We are playing in a segment of the market which is more high range. Our consumers are those who are young and want to distinguish themselves from the crowd. Vespa is for those who want to enjoy their ride rather than keep moving from one place to other. With Aprilia, we are targeting consumers who want to go for longer rides during the weekends,” he says.

Such a description suggests that the company has a very specific consumer profile in mind. Will it be easy to find someone who fits that profile and if yes, what gives the company the confidence that the segment will expand? Graffi says: “India is a young country with a growing economy and increasing disposable income. The premium segment has high potential with the discerning Indian youth looking out for differentiated global brands for their choices.”

And this is what keeps the company somewhat insulated from the slowdown that the other players have been experiencing for some time, he adds. The recent months, too, have not brought encouraging news for the industry as a whole.  “We are growing well due to the high level of differentiation we offer, it helps us stay unaffected by industry drops. While we see the pressure industry is facing as a temporary phase. Also, Vespa and Aprilia are growing by more than 20 per cent over last year.”

There are some who disagree with such an assertion or premise. Zubin Ponnappa, who runs auto-tuning company Zubinn Design, says scooter is still a commuter vehicle in our country, it does not technically come under the fashion category. “The Piaggio scooters come in that category. If that same motorcycle in Paris, it would have been different. So a scooter like Vespa is mainly a style statement. It does not allow you to carry stuff on the floorboard because of the bump at the centre and has low resale value. These are things which consumers look for here,” he says.  

Graffi and Ashish Yakhmi, the head of Piaggio India’s two-wheeler business say they are looking for sustained growth when asked about the prospects of continuing with the 50 per cent growth rate even as the numbers for 2018-19 are awaited. And while the company sold over 100,000 two wheelers manufactured in India in 2017-18 (74,704 units in India and the others in exports), by 2020, it aims to saturate its manufacturing facility in Baramati which has a production capacity of 150,000 vehicles.

The higher percentage of the new dealerships on the anvil are in north India where the company has not done as well as it has in the other three regions. 

“We do not follow a pattern where one dealer has multiple sub-dealers. The look and feel of the showrooms and the corporate identity is the same across the world. The showroom and the workshop are also together so that the customer is not only enjoying the experience at the time of buying but also when she is using it,” says Yakhmi.

One of its new offerings from next month will be the facility of a mobile service van for consumers who do not get the time to visit the service centres due to their busy schedule. The new initiative will help them get the service at their doorsteps. In the initial stages, it will be available only for customers in the bigger cities.

The company will also launch something called e-connect wherein the whole experience inside the showroom can be viewed on a tablet and where the company also tells people what more to expect from Vespa and Aprilia from the product experience perspective. Through the app, they can order a service, buy an accessory, or get service reminders.

Ponnappa identifies Yamaha Fascino as one of the brands that can be seen as a direct competitor to Vespa because of its designs and looks and underscores how it is cheaper. How does Piaggio itself see the prospect of competition when (or if ) more players enter the premium segment? Does it feel its virtual monopoly will be challenged in that case? The company says it is betting on the uniqueness of its branding, its creative designs and its rich Italian heritage. “The story has begun for us and we have a lot to offer as our global portfolio has many unique varieties of brands and products. We also believe in healthy competition as it always encourages us to accelerate in the direction of our goal,” says Yakhmi.