Italian auto company Piaggio is changing gears in India. After bringing back the Vespa four years ago as a niche product, Piaggio seems to be keen to step into the mass market scooter segment, currently controlled by Honda.
The Pune-headquartered Piaggio India, the local subsidiary of the Italian company, is considering targeting the sub-125cc segment presently dominated by HondaActiva. Besides Honda, Piaggio will compete against Hero MotoCorp, TVS Motors, Suzuki, Mahindra Two Wheelers and Yamaha in this market. For this Piaggio plans to introduce a new brand called Fly in a few months (the brand was launched globally in 2013), its fourth in India apart from Vespa, Aprilla and Piaggio. Though exact details will be shared at the time of launch but Fly 125 is expected to be priced at around Rs 58,000-62,000. Fly will likely have disc brakes, analogue speedometer, a digital watch and an engine kill switch. While declining to talk specifically about future products, Stefano Pelle, managing director, Piaggio India said, “We are testing the Fly 125 scooter for the Indian market.” Pelle was talking on the sidelines of opening a concept store for the company’s brands in Pune, called Motoplex.
Piaggio’s new launch when it does happen will reflect a shift in its pricing strategies. Fly is priced closer to the rest of the market instead of Vespa, which was introduced as a premium lifestyle product and priced at Rs 69,000 (ex-showroom, Mumbai), significantly higher than other mass selling scooters in its segment. The Honda Activa for instance sells at Rs 53,300. But over the last three years, despite Piaggio working hard to position Vespa as an aspirational product, the brand has not really taken off.
Vespa volumes have in fact tumbled over the past two years. Its average monthly sales dipped to 2,655 units in 2013-14 and 2,338 units in 2014-15 after the initial drive fizzled out. At the time of the launch Piaggio officials were confident of clocking sales of 20,000 units a month in a phased manner.
There were also several cases of discounts being given by Vespa dealers to spruce sales. Analysts say that the reason behind the fall could be attributed to overall contraction in vehicle demand, low brand activity and limited reach. Its plant in western Maharashtra’s Baramati having a capacity of 300,000 units a year remains under utilised.
Vespa started off on a promising note however. Despite its premium price tag (30 per cent higher than Activa) and limited distribution outlets Vespa clocked an average of 3,200 units a month in the first year of its launch. The company aimed at exploring the white space in the premium segment of scooters which no other brand has been able to achieve.
After introducing the LX125 Piaggio went a step further to launch the SLX150 which is positioned at an even higher category of consumers and priced at Rs 85,000. The SLX150 has a bigger and more powerful engine and is known for its retro styling, even more than the LX125 with its rectangular headlamps and side mirrors.
With Fly, Piaggio seems to be recognising the price conscious Indian consumer. And instead of introducing products at prices way above the average levels, it appears to be willing to move down the price ladder. This may mean more mass market brands from the company which could help generate additional volumes. By doing so, Piaggio would be looking to leverage the robust growth in the domestic scooter segment which remains unabated.
The Fly 125 is aimed at the five million units a year scooter segment. The overall slowdown in demand notwithstanding, scooters have grown by 14 per cent in the April-October period clocking 2.92 million units. Scooter growth comes at a time when the total domestic two wheeler market has grown by 2 per cent at 9.77 million units even as the motorcycle segment fell by 3 per cent 6.43 million units during the same period. Honda leads the category with a 57 per cent share of the scooter market followed by TVS with 15 per cent and Hero MotoCorp with 14 per cent.
Vespa is no stranger to the mass market segment however. In the European region and outside the company sells scooters under Gilera, Scarabeo and Piaggio brands of which brand Piaggio caters to the volume segment. In India too, the company has been toying with the idea of launching such a product for a few years now. Two years ago, Ravi Chopra, Piaggio’s India head had announced that the company was considering a mass market product as no company would want to miss the opportunity presented by the Indian scooter market.
The company is also trying to build its brand among the growing biking community in the country and Motoplex, a concept store, is meant to provide auto enthusiasts with a flavour of the Piaggio brands. Such Motoplex’s, the first of three stores which was opened in Pune a few days ago, are in line with the other 90 stores the group has opened in cities like New York, Shanghai, Beijing, Singapore.