MUMBAI – Piaggio & C.S.p.A. Thursday
made its third foray into India
with the iconic Vespa scooter model, hoping to revive its fortunes in a market
that grew by a quarter last financial year.
Analysts, however, said that the Italian
auto maker is unlikely to mount a major challenge to established players such
as Honda Motor Co., Hero MotoCorp Ltd. and Suzuki Motor Corp. due to the high
pricing of its sole scooter model and its limited retail network in India.
The 125-cubic-centimeter Vespa scooter
model will retail at 66,661 rupees ($1,270) in Pune, near the Baramati factory
where the scooter will be made. Honda sells the 110cc Activa scooter model at
47,945 rupees, while Suzuki's 125cc Access model is priced at 47,774 rupees.
"At this price point, I don't think
the Vespa scooter will make much of an impact," said Hitesh Goel, an
analyst at Mumbai-based Kotak Institutional Equities Research. He said the new
scooter will likely cater to a niche market, comprising mainly young women.
The company "will not compete with
existing players, but will chart an entirely different course by creating an
exclusive and unique segment for the brand," it said.
Piaggio, like several other global auto
makers, is bullish on emerging markets such as India
and expects demand in these regions to partly offset weakness in Europe and the
U.S.
Scooters have made a return in India thanks to
their smarter styling and dual use by both men and women. Scooter sales in India climbed
25% to 2.56 million units in the year through March, outpacing a 12% rise in
motorcycle sales.
Piaggio re-entered India's scooter
market via a wholly-owned unit, a departure from its previous stints when it
had local joint ventures. It previously made scooters with Bajaj Auto Ltd., an
alliance that ended in 1971. The company later tied up with LML Ltd. but ended
that in 1999.
Piaggio Vehicles Pvt. Ltd. will sell
scooters in 35 cities initially. The company currently makes and sells light
trucks and three-wheeled vehicles in India.
Ravi Chopra, chairman and managing
director of Piaggio Vehicles, said the company will invest an additional €20
million to double manufacturing capacity at the Baramati factory to 300,000
units a year by the middle of 2013. Piaggio has already spent €32 million at
the plant.
Gabrielle Galli, chief financial officer
of Piaggio, said the company is also "actively considering" a
four-wheeled vehicle for India
that can seat three passengers.
"We may decide to both manufacture
and sell in India
or only sell. The vehicle may take three years to launch," he said.
