Piaggio's growth strategy
Piaggio is applying a multi-pronged strategy for growth, which includes alternate fuel threewheelers and small commercial fourwheelers
Piaggio is applying a multi-pronged strategy for growth, which includes alternate fuel threewheelers and small commercial four-wheelers.
Enjoying a 25 to 30 per cent market share in the Indian three-wheeler market with the sale of an estimated 50,000 units a year (635,698 threewheelers were sold in FY2017-18, and 511,879 three wheeelers were sold in FY2016-17), Piaggio Vehicles Pvt. Ltd. is renewing its thrust on alternate fuels. Pioneering the diesel three-wheeler space after entering the Indian market in 1999, the company has chalked out a new alternate fuel strategy. It is in-line with the changing market requirements, and involves threewheelers and small commercial four-wheelers. Commanding a good hold on the diesel threewheeler cargo segment with its Ape platform, Piaggio’s alternate fuel strategy looks beyond petrol, LPG and CNG powered Ape threewheelers in the cargo as well as the passenger domain. It could also include electric vehicles depending upon how the market shapes up. Entering the passenger threewheeler segment in 2013 with the launch of a petrol autorickshaw, the company rolled out the 2.5 millionth Ape (Xtra LDX) on July 26, 2018, from the manufacturing plant at Baramati, Pune, with an installed annual capacity of over 300,000 three-wheelers and 80,000 four wheelers.
The roll out of 2.5 millionth Ape was accompanied by an announcement of super warranty scheme, which is claimed to be an industry first, and entitles a buyer of Ape diesel three-wheeler to a warranty of 42 months or 1.2 lakh kilometres, whichever is earlier. For those who buy the Ape CNG, LPG or petrol three-wheeler, the warranty is for 36 months or one-lakh kilometres, whichever is earlier. Apart from the super
warranty scheme, Piaggio has also introduced a personal accident insurance program for an Ape buyer. Claimed to further elevate the value proposition according to Ravi Chopra, Chairman, Piaggio Vehicles Pvt. Ltd., the personal accident insurance is said to have been introduced post conducting a survey of three-wheeler operators.
Keen to carve out a significant presence in the petrol, CNG and LPG three-wheeler segments, and to increase the reach of its Ape three-wheeler platform, both in the cargo and passenger space, Piaggio has also taken the opportunity to facelift the Ape three-wheeler range. Adding some features that are expected to increase its appeal, the company has priced the Ape City DX CNG variant at Rs.152,000 ex-showroom; Ape Auto DX CNG (watercooled) variant at Rs.194,000 exshowroom, and the Ape Xtra LDX Diesel variant (a special edition vehicle in brown colour bearing Piaggio’s milestone badge) at Rs.195,000 ex-showroom.
Claimed to play a prominent role in Piaggio’s global business, the Indian operations, apart from carving out a presence in the small, four-wheel commercial vehicle segment with its Porter range, is working towards lowering the operating costs of its products by increasing their quality and reliability. Keen to present its customers an ability to earn more, the company will soon commercially launch the LPG version of the Ape in the cargo segment. Pursuing a well-honed policy of customer-centricity according to Diego Graffi, MD & CEO, Piaggio Vehicles Pvt. Ltd., the launch of alternate fuel threewheelers is expected to help in widening the reach. Appointed in 2017 as part of a plan to reorganise and consolidate Piaggio’s Asian operations, Graffi hinted at the push for alternate fuel products giving an opportunity to de-risk since diesel was increasingly coming under criticism. With diesel being critisiced for its particulate pollution and the regulatory pressure rising, the strategy to achieve a foot hold in the petrol, CNG and LPG three-wheeler space, claim industry sources, will help Piaggio regain some of the lost ground as well as increase market penetration.
What makes its interesting is the new water-cooled engine sourced from Greaves Cotton that will power the alternate fuel Ape three-wheelers. In comparison to the 435 cc single-cylinder air-cooled diesel engine and the single-cylinder 197 cc petrol engine, the new 385 cc water-cooled engine is engineered to better dissipate heat, courtesy higher density and superior thermal conductivity. Producing 25 per cent higher power and torque than the air-cooled engine, the watercooled engine is claimed consume 40 per cent less oil. Said to be the first of its kind to power a threewheeler, the water-cooled engine is also claimed to be 15 per cent more fuel efficient than the competition. Said Graffi, “The Ape powered by the new engine will help us to address intra-city segment requirements of power, pick-up, mileage and maintenance.”
If the facelifted Ape range and the new water-cooled engine point at Piaggio’s desire to invade new product segments, and to further strengthen its presence in the segment that is doing well, a renewed sense of customercentricity is visible. Bullish about a market trend that suggests the demand for three-wheelers will increase over the next five years, and in-line with the growth of the Indian economy, Piaggio is renewing focus on the fourwheeler segment too. Mentioned Graffi, “We are focusing on entering new product segments, strengthening our position in the existing segments, improving our aftermarket penetration, expanding our network and improving the affordibility of our products.” Exporting vehicles to SAARC countries like Nepal and
Bangladesh, Piaggio is pushing its Porter four-wheel small commercial vehicle range slowly and steadily. Working to have its product portfolio to comply with BSVI emission standards, scheduled to come into force by mid-2020, the company, with the Porter 700 and Porter 1000 (launched in February 2018) is keen to carve out a place for itself in the 3.25 lakh units strong (sub3.5-tonne) SCV market that has
a stronger contender in the form of Tata Ace. In the sub-two tonne SCV market, the Ace commands a marketshare of more than 70 per cent. Close to 1.1 lakh Tata Ace are claimed to be sold every year on an average. It commands a market share of an estimated 70 per cent. In comparison, Piaggio’s share in the four-wheel sub-two tonne SCV market is dismal. The sub-two tonne market interestingly has been seeing
much activity in the recent times with the entry of passenger car leader Maruti Suzuki with the Super Carry. New emerging segments like ecommerce, municipality, etc., are pushing the demand. Struggling to align with customer needs with the Porter 700, Piaggio is putting its weight behind the Porter 1000. With the Indian operations described as a lab whose results could be replicated in other markets around the world, Piaggio is expecting 100 per cent growth in the exports markets of Bangladesh and Nepal. The company has equipped the Porter 1000 with a 27 hp, one-litre common rail two-cylinder engine with a GVW of 1.9-tonnes. A market
leader in Kenya according to Graffi, the SCV major is investing in R&D to design products that address local market needs. Keen to respond to the market needs quickly, Piaggio, exporting its products to more than 50 countries, is looking to tide over the challenge of technology and cost through localisation and by engaging local skill sets. Banking on modularity, it is continuing to invest in customsiation. Banking on products that combine features, which would result in a low total cost of ownership, the company, according to Graffi, is expanding its network. From 400 dealers and 1000 touch points, it is keen to reach the 500 dealership mark by 2020. Well aware that a strong network will be necessary for a successful migration to BSVI, it is also working to address the needs for new application areas that are springing up. Said Graffi, “The roll-out of Piaggio’s five millionth vehicle, the next big milestone, will be attained in a shorter time than it took to get past the 2.5 million mark.”
⇩ The Ape Auto DX CNG autorickshaw is part of Piaggio’s new growth strategy.
⇧ The Ape Xtra LDX LPG cargo carrier is powered by the new watercooled engine.
⇧ The Ape City DX CNG autorickshaw.
⇩ The Ape Xtra LDX diesel cargo carrier.
⇧ Piaggio is putting its weight behind the Porter 1000.