High input costs dent Piaggio margin 3-4%

Rising input costs have dented Piaggio Vehicles Pvt Ltd's margin by 3-4% in the current financial year so far, the company’s Chairman and Managing Director Diego Graffi told Informist.

The maker of Vespa two-wheelers and Ape brand of three-wheelers had to absorb most of the rise in cost of steel, rubber and freight rates as a full pass-through amid a slump in vehicle demand was not conducive.

Further, the company also faced a shortage of semiconductors, among other inputs.

Though the company had managed to undertake a price hike on account of the implementation of Bharat Stage-VI norms, which came into effect from April, it feared that topping that up with another price increase would have been "too much for the market", Graffi said.

Speaking on the recovery in the aftermath of the COVID-19 outbreak, Graffi said that going by the prevailing situation, the company, in another five to six months, would be able to achieve levels of production seen in 2019.

Any more lockdowns, however, will spell disaster for the sector, he added. Piaggio can manufacture 300,000 three-wheelers and 150,000 two-wheelers and engines each a year at its units across Baramati in Maharashtra.