Piaggio's growth strat­egy

Piaggio is ap­ply­ing a multi-pronged strat­egy for growth, which in­cludes al­ter­nate fuel three­wheel­ers and small com­mer­cial four­wheel­ers

Commercial Vehicle - - WHAT'S INSIDE - Story by: Ashish Bha­tia

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.

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