It is barely a week since Diego Graffi took over as CEO & Managing Director of Piaggio Vehicles. Yet, he is no stranger to India and has been following developments here keenly for nearly a decade going back to the time when he first joined the Italian parent company in 2006.

“Piaggio India is not new to me and I am very excited with the opportunities ahead in the mobility arena where there are many things to do,” says Graffi. “We have had a good run since 1998 and would like to grow further from here.”

The new Piaggio chief was in Mumbai this week for the launch of the four-wheeled Porter 700 cargo carrier. Over the last 18 years, the company has carved a niche for itself in this product space when it first set in motion the diesel three-wheeled goods carrier. At that point in time, Piaggio was just coming out of a divorce with the Kanpur-based LML in two-wheelers. Its resurrection in India’s cargo space seemed a bit of an anticlimax to those who would have preferred to see the Vespa comeback instead.

Game changing decision

“Way back in 1998, we realised there was a need for cargo movement and last mile connectivity. We made diesel for the first time in a cargo and this product is still relevant while continuing to grow,” says Ravi Chopra, Chairman, and architect of the Piaggio story in India.

Nobody had, till that point in time, thought of diesel as a fuel for a three-wheeler cargo. The next step was to customise the offering and expand its uses across different user segments. “We transformed the three-wheeler image from autorickshaw drivers to cost-effective providers of transport systems,” he adds.

It is this core philosophy of being the leader in last mile transportation that drives Piaggio’s India strategy. With a share of over 50 per cent in the three-wheeled cargo space where it “created, grew and owned” the segment, the recently launched Porter 700 is intended to take the story to the next level.

“We will grow our leadership and widen the choice to the customer with different loads for more destinations,” says Chopra. “The Porter 700 marks an extension of our three-wheeler cargo where both will have a role to play.”

There are no two ways about the fact that Piaggio has hit the bull’s-eye in the goods carrier segment though it would have loved to replicate this success in two-wheelers. The Vespa and Aprilia brands have been positioned in the niche premium space but numbers have not been anything to write home about.

Sure, there have been efforts to spread the message with the Motoplex outlets, which have been commissioned in some cities. Yet in a market where the mass commuter segment still rules the roost, cracking the premium code is easier said than done.

“I am neither happy nor unhappy with two-wheelers,” says Graffi. “The past is the past and we need to focus on the future in this huge market.” Chopra reiterates that the company will stay in the premium end of two-wheelers while admitting that the pace of growth has not been great.

BS VI challenges

The next big challenge for Piaggo is getting ready with the right products to meet Bharat Stage VI emission norms that kick in from April 2020. The R&D teams from Italy and India are already working together on this transformation exercise both for two and three/four-wheelers. Piaggio has two types of engines, one of which is outsourced and the other locally produced that means a “joint integrated effort” is underway on the clean drive.

“We have enough expertise around the world to help achieve the BS VI target,” says Graffi. “Cost is a challenge anywhere because technology does not come in cheap but we have three years to tackle the change in the market.” Piaggio has set itself an internal target for all its products to be BS VI-compliant by September 2019 so that they are eventually ready for registration in April 2020.

Clearly, the company does not want an encore of the BS IV transition where the Supreme Court decreed that effective April this year, there would be no sales of BS III vehicles across the auto ecosystem. Many manufacturers found themselves saddled with old stocks that had to be liquidated at high discounts in the market.

“India is a laboratory for Piaggio and its role will increase with the BS VI regime,” says Graffi. “At a group level, along with other countries, it has a role to play in the overall last mile transportation business. We are sharing inputs/data and the advantage of working in a global group is that issues are similar for some of our other operations too.” Even while the move to BS VI will mean new and pricier products, Chopra insists that the diesel three-wheeler cannot be wished away and is here to stay. “It can be upgraded and modernised as part of the transportation solution,” says Chopra. “Growth of three-wheelers is a key part of Piaggio’s India strategy and will stay on for some years even while products like the Porter 700 will extend the choice to the end user.”

The Indian operations are also expected to be leveraged globally to meet transportation needs in Africa and Latin America. These are potentially huge markets for three-wheelers and Africa, in particular, is a region, which can be serviced directly from the Baramati plant in Maharashtra. “India will play an increasingly important role and we have big ideas going forward,” says Graffi.

These could even include a host of new mobility solutions, which will become relevant thanks to rapid urbanisation in emerging markets like India. It is in this context that Piaggio Fast Forward, the new entity headquartered in Boston (US) will lead the way in coming up with innovative, out-of-the-box mobility options.

It is perhaps too early in the day to say whether any of these solutions will be specific to India since they will involve costs but there is every reason to believe that things could well change in the next decade. The NT3 quadricycle was tipped to be developed for this market but was not found suitable. There could just be another small four-wheeler that could do the trick in the coming years.

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