Diego Graffi, MD & CEO, Piaggio Vehicles Pvt. Ltd.

Q. How do you look at Piaggio’s journey in India? A.

We have rolled out the 2.5 millionth three wheeler in India. We have attained an important milestone, and it is a big feat for us. It also sets the tone for the next phase of growth, and a milestone of five million vehicles that we are targeting. We reached one million vehicles in 2010. It took us eight years to get to 1.5 million vehicles. The next 2.5 million mark we expect to reach earlier. The market trends suggest that the demand for threewheelers will increase over the next few years. The Indian economy inspires confidence, and we have decided to renew our portfolio.

Q. Are you eyeing BSVI as you renew your portfolio? A.

In the next two to three years, we will renovate all our main products in the passenger and cargo space with an eye on BSVI. The renovation will look at better performance, payload, ergonomy, higher deck length and greater fuel efficiency. We are announcing the introduction of two new novelties related to service and customer assistance. The ‘Super Warranty’ program applicable to all our diesel vehicles will have the customers entitled to 42 months or 1.2 lakh kilometres (whichever is earlier). Customers buying alternate fuel vehicles will be entitled to 36 months or one lakh kilometres (whichever is earlier). Apart from warranty, Piaggio customers buying a threewheeler will be entitled to a personal accident insurance cover of Rupeesone lakh. We are also announcing a major improvement in our powertrain range with the introduction of watercooled alternate fuel engines. These are a reliable alternative to the diesel powertrain. We are the market leaders in India in the diesel segment. India for us is a market that we will continue to invest in. We are convinced that demand for alternate fuel powered three-wheelers will increase in the near future.

Q. In terms of sales, are you happy with the performance? A.

Our volumes have been in-line with the industry average. We are satisfied with the performance over the last six months. We have improved our leadership in the cargo segment with a market share of 45 to 50 per cent. We have maintained our leadership in the diesel segment with a market share of 42 to 43 per cent. We have improved our volumes in the suburban and rural passenger segment applications. The momentum seen in the segment since September 2017 is encouraging. We expect it to continue at least until mid2019. We have witnessed a 135 per cent growth in the small passenger alternate fuel powered vehicles across the country where we have a market share of under 10 per cent. We have been able to maintain our market share in both, the domestic and export markets. We have grown 98 per cent in exports year-on-year. Our target markets are west Africa, southeast Asia and middle east Asia. We are also improving our standing in existing export markets of Bangladesh and Nepal among others. The period between August and midNovember will be very important.

Q. Are you making any investments to fuel your growth plans? A.

We don’t feel the need to make any major investments given the fact that the utilisation levels at the plant are very high at 95 per cent. We expect the utilisation levels to remain high for the next three to five years. Our main investment will be towards powertrains. We plan to introduce as well as improve our current powertrains. We want to offer better performance as we work to meet the BSVI compliance levels. We want to be ahead of the time since we expect customer evolution pertaining to three-wheelers. We want to draw from our global experience.

Q. Have you achieved the target you set at the time of Porter 700 launch in 2017? A.

In three-wheelers, we did beyond our expectation. In the four-wheeler segment, we see a big scope of improvement. We recently launched the Porter 1000 with one-tonne payload. The latter is completely new in terms of the dash, braking, deck length, etc. In the case of the former (Porter 700), let me be honest, we struggled as we were not really prepared for the transition to BSIV. It is now that we have aligned ourselves with customer needs. We believe that the Porter 700 and Porter 1000 are ready to take on the competition. Honestly speaking that was not the case earlier.

Q. Given the volatilty of sub-one tonne segment, will the four-wheel SCVs help de-risk? A.

The segment has been troublesome as you pointed out. There will be a big challenge when BSVI comes into play. Deep investments in terms of technology will be needed. Our current

diesel range, for instance, the 1000 range with a twin-cylinder engine is already offered with common-rail engine. It is BSVI compliant. The jump to BSVI from BSIV will be consistent as opposed to the jump from BSIII to BSIV. The challenge of technology and cost will be a big one to tide over. The big challenge would be to consume the resultant higher costs of production. It is therefore that we are attempting to combine features that will offer a low total cost of ownership as a differentiator. If we succeed, the returns from the sub-one tonne segment will be positive. The strategy therefore is to put in place a modular platform to capture the passenger and cargo segments. The same kind of engine will give us the flexibility to address the requirements of multiple applications.

Q. What are your expectations from the segment the Porter 1000 is in? A.

The segment the Porter 1000 is in, is growingyear-on-year.

It is growing steadier than the sub-one tonne segment, which has shown volatility. For the next two years, the challenge would be to comply with BSVI emission regulations, and at the same time gauge customer response.

Q. Speaking of your renewed product portfolio, how key a role has your partner Greaves Cotton played in helping you get there? A.

Oh, a very key role. Greaves has been a partner to Piaggio historically with whom we continue to work very closely. Their new lineup of engines for the three-wheeler segment is sure to hold us in good stead. At the moment, our product portfolio is at quite a satisfactory level given the mix. We do not foresee a further immediate need to expand it in the near future.

Q. Does the emphasis on alternate fuel powertrains include electric technology too? A.

We have the technology, and the capacity to build it in-house. We are closely watching the evolution of the market. Electric three-wheelers are not a new phenomenon for India. We are confident of building a fully electric powertrain in-house whenever the market matures.

Q. With the introduction of new products, are you expanding your network? A.

We have been working to renew our corporate identity over the last few months to provide our customers a unique experience when they visit a Piaggio outlet. We are working to upgrade all our dealers across India. We have more than 400 dealers with nearly 1000 touchpoints. We plan to expand further. To reach 500 dealerships before 2020 should not be difficult.

Q. Are you into custom-built vehicles on platforms that you offer? A.

Yes, customisation is an area that we are continuing to invest in. We have seen a lot of examples not only in India but also in the export markets of Bangladesh and Nepal. Our Ape range for instance is used for diverse applications. It is because of the flexibility it offers in terms of customisation.