Vespa set for third coming in India

The iconic Vespa, a name once eponymous with the scooter in India till Bajaj usurped that honour, is poised to make another comeback in a new-age avatar, nearly 50 years after it first rolled into the country. The board of Piaggio & Co has okayed a plan to invest nearly e30 million over two years to establish a 1.5-lakh capacity plant that will produce a model specially developed for India, the world’s second-largest two-wheeler market, the Italian company said in a statement.

“A meeting chaired by Roberto Colaninno (chairman), the board of directors of Piaggio & C. SpA 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,” the statement said. The first scooters are to roll out by the end of 2012, the company said.

Vespa first entered India in the late 1950s through a joint venture agreement with the Firodias who were then part of the Bajaj group. The Vespa 150 was an immediate success, spawning long waiting periods. The JV was terminated in 1971 in the wake of the Indira Gandhi government’s socialist policies.

The scooter was back in India again through a joint venture with LML in 1983. That partnership ended in 1999 after a protracted dispute with the
companies when LML bought back Piaggio’s stake in the company. Though Piaggio had revealed plans to relaunch Vespa as early as 2006, the scooter’s third coming is tinged with irony as the Bajajs, its first partner, has announced plans to exit the scooter segment to singularly focus on the motorcycle market. Even so, the market conditions are suited for Piaggio to foment strong growth.

“India’s two-wheeler market grew at an average annual rate of 7% between 2004 and 2009, with 8.4 million vehicles sold in 2009. The scooter segment accounted for 15% of the total market, with sales totalling 1.3 million units in 2009 and an estimated average annual growth of more than 13%,” Piaggio said.

Piaggio plans to produce up to 1.5 lakh units a year at its new facility in India. The company, which also makes the Apé range of three and four wheelers, sees revenues from the scooter venture to touch nearly e70 million in three years with sales of 1.1 lakh.

The new factory apart, another one run by Piaggio’s Indian offshoot could also produce Vespas. Piaggio Vehicles India Pvt Ltd, which operates an engine plant for two- and three-wheelers at Baramati in Maharashtra, has the capacity to manufacture Vespas, said managing director Ravi Chopra. “The current capacity for the engine plant is 1,00,000 per annum,” he said.

The Rs 360-crore engine plant has begun to make petrol engines of 125 and 150 cc, with plans to also produce 1 and 1.2 litre diesel engines for Piaggio’s three wheelers.

Piaggio also plans to establish boutique showrooms for selling the scooter. “This is an iconic brand with a long association with India and needs to be showcased accordingly,” said Mr Chopra. Piaggio’s plan to relaunch Vespa comes at a time of “extraordinary growth” of its Indian offshoot.

“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 in India,” the company said.