Piaggio Group expands operations in India and Asia-Pacific

Jan 22 2008 16:02

The Piaggio Group illustrated the strategic guidelines for expansion of the Group’s operations in Asia

Mumbai (India), 22 January 2008 – The Piaggio Group, the leading European constructor of two-wheel vehicles and a primary global player, which has also built up a solid position in light transport vehicles in Europe and Asia, held a press conference in Mumbai at which chairman and chief executive officer Roberto Colaninno illustrated the strategic guidelines for expansion of the Group’s operations in Asia.

Engines for four-wheel light transport vehicles: new agreement with Daihatsu

The Piaggio Group recently reached a major agreement confirming and strengthening its strategic cooperation with Japan’s Daihatsu Motor Co., Ltd. (Daihatsu), the world leader in design, production and marketing of technologically advanced compact motor vehicles.
Enhancing the long-standing links between the two companies, the agreement extends cooperation in light transport vehicles to provide for:
• the supply by Daihatsu of powertrains (1,300cc petrol engines and transmissions) for the current Piaggio Porter range of light transport vehicles;
• further cooperation relating to the supply by Daihatsu of parts, components and assemblies for the new models in the Porter and Quargo ranges mounted with the new small-displacement Piaggio turbodiesel and diesel engines; these engines will be producing at its Indian subsidiary, Piaggio Vehicles Private Limited (PVPL).

The Piaggio Group in India and Asia-Pacific: 2007 projected net sales €290 mln (+18.4%)

The new Piaggio Group organisation in Asia operates through manufacturing and marketing subsidiaries and joint ventures in four countries—India, China, Vietnam and Japan. Its Asian operations have an industrial and commercial impact on the Group’s entire product pipeline, which comprises two-wheelers (scooters and motorcycles) and three- and four-wheel light transport vehicles (Ape, Quargo and Porter ranges).

According to preliminary estimates, in 2007 the Piaggio Group reported net revenues totalling approximately € 290 million in India and Asia-Pacific, for YoY growth of 18.4% from € 245.0 million in 2006. Specifically, turnover at the Indian subsidiary PVPL gained 15.3% to reach € 238.0 million, from € 206.4 million in 2006.
The figures do not include results at the Piaggio Group’s Chinese joint venture, which are not consolidated in the Group’s results.

India

The Group has a strong and successful presence in India, which will play a key role in the new organisation.

Piaggio Vehicles Private Limited (PVPL) is a wholly owned Piaggio subsidiary headquartered in Pune in the State of Maharashtra. From its manufacturing plant in Baramati, it currently produces and markets the Ape three-wheeler range of passenger and cargo vehicles, and the new Ape Truk four-wheel commercial vehicle with a carrying capacity of 800 kg, launched on the Indian market on July, 2007.

In just four years, Piaggio Vehicles Private Limited has more than tripled its sales volumes, from 49,600 vehicles in 2003 to more than 154,000 vehicles sold in 2007.

In India, the Group also plans to invest € 60-65 million in the development and industrialisation of small-cylinder turbodiesel and diesel engines (up to 1,200cc) and construction of a powertrain plant in Baramati. As noted above, the Group will be partnered by Daihatsu on development and industrialisation of the new powertrains.

As part of its development strategy, the Piaggio Group, through its PVPL subsidiary, today signed an 8-year agreement with Greaves Cotton Limited under which Greaves will:
• continue to supply PVPL with the GL 400 BSII monocylinder diesel engine;
• supply PVPL with the G 435 BSIII monocylinder diesel engine, beginning in 2010 to coincide with the pan-Indian introduction of the Bharat III emissions regulations in India.
Greaves will provide PVPL with the engines as the sole supplier of monocylinder diesel engines for Ape three-wheelers built by PVPL, thus enabling the Piaggio Group to meet its objectives for eco-compatibility, efficient fuel consumption and general product price competitiveness.

In addition to the supply agreement with Greaves announced today, the Piaggio Group has a close partnership with Lombardini/Kholer, which supplies PVPL with the 482cc liquid-cooled 5-speed diesel engine mounted on the Ape Truk four-wheeler.

China

In China in 2007, the Piaggio Group constructed more than 200,000 two-wheel vehicles at the Foshan facility run by the equally owned joint venture formed in 2004 with local partner Zongshen Group. The vehicles are produced under the Piaggio brand for distribution on the European market and on a co-branding basis with local partner Zongshen for the Chinese market.
The results of the Chinese joint venture are not included in the Group consolidation.

Vietnam

In Vietnam, construction of a new facility has begun in the Hanoi area, and is expected to be completed by the end of 2009. The factory will produce Vespa scooters for the local market. The total investment, for which the Group has established a 100% controlled subsidiary, Piaggio Vietnam Co. Ltd., amounts to an estimated USD 25/30 million.

Japan

Operations in Japan are conducted through the subsidiary Piaggio Group Japan Corporation, established on January 1, 2008, to strengthen Piaggio’s market position and rationalise the import and distribution of vehicles for all Group brands. The subsidiary will coordinate sales and marketing, taking a role similar to that of Piaggio Group Americas Inc. in North and South America.

Growth guidelines: new products and global sourcing

The Piaggio Group’s extensive geographical presence described above will accelerate development of new two-, three- and four-wheel vehicles and new engines; at the same time it will help the Group enhance components and accessories sourcing operations through Group global sourcing divisions in Surajpur (India) and Foshan (China).

Two-wheelers: the Group enters the Indian market

In parallel with the supply agreements on three- and four-wheel commercial vehicles signed with Greaves and with Lombardini/Kholer, and with the recent expansion of cooperation with Daihatsu, the Piaggio Group intends to build a strategic focus on two-wheeler production and marketing in India, maximising technological innovation through development of eco-compatible engines delivering low emissions and reduced fuel consumption.

In this connection, the Group said recently that it would begin European marketing of thermo-electric hybrid scooters at the end of 2008, the world’s first large-scale application of this technology in the scooter industry.

At the same time, the Group is conducting its market analyses to verify the feasibility of the launch of two- and 3/4-wheel hybrid vehicles in India, presumably at the end of 2009 and early 2010.

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