Strategy

Strategic growth drivers 

The Piaggio Group seeks to create value by building on and developing its strengths, so as to make the most of macro-trends in the economy in general and in the industry.

Growth in emerging countries and recovery in the industrialised world

The world economy today is growing at two speeds. Industrialised countries (Europe and the United States) are experiencing a period of economic stagnation, while the emerging world, as represented by Asia (in particular China, India and the ASEAN countries) and Brazil, are spearheading world growth. The fast-paced growth enjoyed by these countries in recent years is expected to continue into the future, so much so that the International Monetary Fund has forecast that in just a few years’ time, China’s real GDP will match that of the United States and Europe.

Such economic development has brought about general progress for the countries themselves, in the form of better infrastructure, higher consumption and growing urbanization.

Especially in Asia, a new middle class is developing with increasingly more purchasing power. Year after year, its share of world consumption is growing, and will continue to do so.

It is reasonable to assume that emerging countries will continue to drive world growth in the future, and as such they represent fundamental markets for global companies such as the Piaggio Group.

As concerns the industrialised world, economic recovery after the 2009 crisis is expected to pick up, though not at a rate comparable to the growth recorded by developing countries.

Urbanization and sustainable mobility

With regard to the transport sector, urbanization is on the rise in a significant way in emerging countries, but also in the industrialised world, bringing with it an increase in the amount of traffic, and its concentration. This, in turn, is raising the need for safer forms of transport that are environmentally friendly, in terms of lower emissions and lower fuel consumption.

Objectives

Given the trends described above, and the current positioning of the Piaggio Group, the following strategic objectives have been identified:

• To consolidate our leadership of the European two-wheeler market and of the Indian light commercial vehicles market;
• To increase our presence on international markets, with particular reference to the Asian area;
• To boost the operating efficiency of all company processes, with a focus on industrial productivity. 

These growth objectives will be pursued by building on, and investing in, the constant reinforcement of the Group’s key assets:

• Distinctive brands, recognised worldwide.
• An extensive sales network on reference markets.
• Competency in research and development, focused on innovation, safety and the environment.
• A strong international presence, with local operations for all core company processes, from marketing to research and development, production and purchasing.

Business strategy

From an operational point of view, the Group has adopted an action plan to meet its objectives, targeted at its business segments (two-wheelers and light commercial vehicles) and the various geographic markets in which the Group operates. Specifically:

Two-Wheeler Vehicles

• Europe – consolidating a leadership position: The scooter product range will be developed and improved, to consolidate coverage of each market segment, and the motorcycle range will be streamlined, to emphasise the different missions of each brand.
• Asia – major development: The aim will be to create conditions for sustained, continuous growth in the area, also through the expansion of the production site in Vietnam. The product range will be enhanced and, in addition to the Vespas manufactured on site and products imported from Europe, new products manufactured in Vietnam will be introduced, designed and developed for local markets.
• India – entering the market: In 2010, an investment project got underway for the manufacture and marketing of two-wheeler vehicles for the local market. By 2012, a new production site will be in operation, with a capacity of 150,000 units/year. 
• America – going back to growth, by consolidating the product range and sales network. 

 Commercial Vehicles

• India – an increase in volumes and profitability, by consolidating our leadership of the three-wheeler market and developing new, four-wheeler products. As for engines, new diesel and turbodiesel engines will be manufactured in India, in order to expand and segment the product range on all Asian and European markets. 
• Europe – growth based on eco-sustainable solutions, with a product range featuring new engines with zero or low environmental impact and lower consumption.  

Planned financial objectives for 2010-2013

• Consolidated turnover of approx. €1,900 million
• Sales volumes of approx. 800,000 units
• EBITDA at approx. €285 million (15% of turnover)
• Reduction in debt: net debt of €300 million by 2013
• Three-year investment plan (2011-2013) of approx. €315 million

The Piaggio Group’s performance in 2010 was largely in line with its planned financial objectives.

Net revenues

Ebitda/Net Revenues