ITALY: At a meeting on June 3, 2010 in Milan (Italy) chaired by Roberto Colaninno, the Board of Directors of Piaggio & C. S.p.A. approved the strategic guidelines and industrial plan of a new Piaggio Group initiative in India for the production and sale of two-wheel vehicles, beginning with a Vespa LX 125 model specially developed for the Indian market, according to a communication from Piaggio Italy.
India’s two-wheeler market – the world’s second-largest – grew at an average annual rate of 7 per cent between 2004 and 2009, with 8.4 million vehicles sold in 2009. Of the total, the scooter segment accounted for 15 per cent of the total market, with sales totalling 1.3 million units in 2009 and estimated average annual growth of more than 13 per cent.
The plan approved by the Piaggio Board of Directors provides for the construction of a new facility in India to produce up to 150,000 units/year and the launch of a Vespa LX 125 model by the end of 2012. The Plan will entail investments totalling 30 million euro (Rs 168.7 crore approximately) in financial years 2010 and 2011, with the goal of achieving revenues of approximately 70 million euro (Rs 393.61 crore approximately) in 2015 – when investment payback is projected – on sales of approximately 110,000 scooters. The investment is covered by the programmes drawn up under the Three-Year Plan approved by the Group Board of Directors on 2 July 2009.
The new Piaggio industrial initiative in India will have the support of the Group’s local industrial and commercial operations through the Piaggio Vehicles Private Ltd. subsidiary, whose extraordinary growth – from 35,000 vehicles produced and sold in 2003 to more than 182,000 in 2009 – has established Piaggio as the leader in three-wheel light commercial vehicles on the Indian market.
At its Baramati plant, Piaggio Vehicles Private Ltd. is also completing industrialisation of the new 1 and 1.2 litre diesel and turbo diesel engines intended for the new Piaggio commercial vehicles to be marketed on the European and Asian markets.
During the meeting the Chairman reported to the Piaggio Board of Directors on Group performance in the first five months of 2010. Despite the weakness in demand in the European market in general, and the Italian market in particular, Piaggio Group performance from January to May 2010 was positive, with a 5.8% increase in consolidated net sales to 654.1 million euro in the first five months of 2010, compared with 618.5 million euro in the year-earlier period.
Piaggio first licensed the production of Vespa scooters in India to Bajaj Auto in the 1960s. In 1971, Piaggio's license was not renewed as a part of Indira Gandhi's privatization programs. After the collaboration ended, Bajaj continued to produce scooters of its own design, namely the Chetak, using design and engineering cues it had gleaned from the earlier affiliation.
Another Vespa partner in India was that of LML. Beginning as a joint-venture with Piaggio in 1983, LML, was also a large parts supplier for Piaggio. In 1999, after protracted dispute with Piaggio, LML bought back Piaggio's stake in the company and the partnership ceased. Piaggio, in 2007, announced plans to reenter the Indian market. This time, however, Piaggio plans to do so with a wholly owned subsidiary.
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