Piaggio to challenge Bajaj in export markets

Piaggio, which recently added some extra sheen to its Vespa brand with the Vespa S scooter, is also working on expanding its bread-and-butter three-wheeler business. The company, which has established itself as a leader in the three-wheeler cargo carrier market in India, now wants to earn a respectable share in the passenger carrier space as well. Piaggio Vehicles India, which entered the Bajaj Auto-dominated segment in the domestic market with the Ape Xtra passenger carrier, is now looking at challenging the market leader in international markets.

“Bajaj sells more overseas than it does in India. It has a monopoly. Now that we have a product, we will start slowly entering into international markets as well,” said Ravi Chopra, chairman and managing director, Piaggio Vehicles India.

India’s domestic three-wheeler market stood at 479,634 units in 2013-14. Of the total market, 80 percent comprised passenger carriers. Piaggio, which sold 117,380 units in the last financial year, has a 30 percent market share while market leader Bajaj enjoys an almost 50 percent share. In the alternate fuel segment, the figure goes to over 90 percent.

In the export market, Piaggio sold 18,696 passenger-carrying three-wheelers compared to Bajaj Auto’s 260,762 units. Chopra sees a strong opportunity for his company in the export markets.

In the coming months, Piaggio plans to export its passenger carrier three-wheelers to Latin America and the African markets like Kenya, Tanzania and Egypt.

Chopra is bullish about the prospects of the three-wheeler market even though some OEMs have launched small four-wheeler passenger vans. He is of the opinion that quadricycles may not be a threat to the autorickshaw. “The rate of growth may come down but the market cannot be wished away. Three-wheelers are here to remain whether you like it or not. They will co-exist with any other four-wheeler,” says Chopra.

Piaggio is defending the three-wheeler bet but it is also testing the waters to enter the quadricycle segment in India. That could be based on the NT3 four-wheeler concept, which was showcased at the Auto Expo in February 2014. “The idea is to demonstrate our capabilities, strengths, technical competence and design capability. Once we do this, applications can evolve,” says Chopra. He doesn’t mention if a production version of it is coming soon but says “we can make a quadricycle anytime,” in another interview. He does not mind though if Bajaj Auto is the first one to enter that segment.

INTERVIEW WITH Ravi Chopra, CMD, Piaggio Vehicles India

How do you plan to build your Vespa scooter brand further?
We launched the Vespa two years ago. We were able to create a premium space in the scooter segment, which did not exist before. Having done that, we are proud to own that space because we know nobody else can enter that space. Therefore, we are adding more products, variants and extensions which can change in the Vespa range so that, ultimately, we bring the Vespa world to India.

The scooter market seems to be immune to the overall slowdown in the two-wheeler market. Do you expect the good run to continue?
In the two-wheeler market, scooters have had a sustained 15 percent CAGR. All that is fine but we are not looking at volumes as a mass-market product. We are looking at volumes that will support our premium positioning strategy. So there is enough to penetrate. We want to look at the bigger picture. What does the customer need? He needs brand value, something that gives him that value addition. That is what we are providing with the Vespa and a premium product. If we were not providing that, we would be like any other mass- market product.

Like the Vespa scooters, do you plan to assemble the Aprilia, Moto Guzzi bikes too?
At present, we are using the CBU route. Tomorrow, we can have an SKD route. But CBU route or SKD route, the price is not going to change. Price is value for money. We will leverage the custom duty structure, so there will be cost efficiency because if we import an SKD, the duty is 30 percent, if you import a CBU, it is 60-75 percent. But that does not mean the pricing structure will change. We want the buyer to make a clear choice for the product and not buy any other, even if offered 10 choices.