Vespa's Re-entry Strategies for the Indian Market

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Case Details:

Case Code : MKTG304
Case Length :15 Pages
Period : 2012
Pub Date : 2013
Teaching Note : Available
Organization :Piaggio Vehicles Pvt Ltd
Industry : Indian scooter market, two wheeler market
Countries : India

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About Piaggio and Vespa

Piaggio was founded in Genova10 in 1884 by Rinaldo Piaggio . It offered products such as scooters, motorcycles, and mopeds in the displacement range of 50cc to over 1200 cc and under the brands Piaggio11 , Vespa, Gilera12, Derbi13 , Aprilia14 , Moto Guzzi15 , and Scarabeo16 . Vespa was one of Piaggio's successful brands. The Vespa was a two-wheeled utility vehicle considered as a utilitarian, stylish, fun, and cheeky product. Corradino D'Ascanio17 designed the Vespa scooter and the first Vespa was produced in April 1946. The Vespa was the only scooter in the world which used a monocoque chassis.18

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Piaggio's spokesman said that right from its launch, the Vespa had become the best selling scooter in Europe and that it had appeared in more than 200 Hollywood movies. The Vespa was the result of Enrico Piaggio's19 efforts to produce a low cost product for the masses.

The Vespa first entered India in the late 1950s through a joint venture with the Bachraj Trading Corporation20 (BTC). BTC assembled the Vespa15021 scooters by importing the scooter engines from Piaggio. In 1971, two wheeler sales in India registered 0.1 million units per annum and showed a continuous upward trend 22. However, the Piaggio-BTC joint venture was terminated in 1971 due to the Indira Gandhi government's socialist policies and the disparities raised between BTC and Piaggio over the exports of Vespa scooters by BTC where Piaggio operated.

In 1983, the Vespa scooter re-entered India through a joint venture with Lohia Machinery Ltd23 (LML). Vespa scooters were sold successfully for more than a decade through this joint venture. The sales of two wheelers in India went up to 3 million units per annum in 1998. But the partnership between LML and Piaggio ended in 1999 after a dispute broke out between the two companies when LML bought back Piaggio's stake in the company.

In 1999, Piaggio started its own subsidiary in India with Piaggio Vehicles Pvt Ltd and started producing a three-wheeled utility vehicle under the brand name Ape 24.

Excerpts - Next Page >>

10] Genoa/ Genova is the capital of Liguria and the sixth largest city in Italy, with a population of 608,676.
11] Rinaldo Piaggio an Italian started Piaggio in his twenties.
12] Gilera is an Italian motorcycle manufacturer founded in Arcore in 1909 by Giuseppe Gilera. In 1969, the company was purchased by Piaggio.
13] Derbi is a manufacturer of motorcycles, scooters, mopeds, and recreational all-terrain vehicles produced by Nacional Motor S.A.U, a Spanish subsidiary of Piaggio & Co. SpA.
14] Aprilia is an Italian motorcycle company owned by Piaggio. Aprilia started as a scooter manufacturer, but later it moved into manufacturing of motorcycles.
15] Moto Guzzi is an Italian motorcycle owned by Piaggio.
16] Scarbeo is the range of scooters from Piaggio available in the range of 50 cc to 500cc.
17] Corradino D'Ascanio, an engineer at Piaggio, also designed, constructed, and flew the first modern helicopter. He hated motorcycles, so D’Ascanio dreamed up this revolutionary new vehicle.
18] A monocoque chassis is made up of single piece, it was part of Vespa scooters.
19] Enrico Piaggio is the son of Ronaldo Piaggio. He took the decision to diversify into manufacturing Vespa scooters.
20] Bachraj Trading Corporation was formed by Firodias and Bajaj Family, later the company was renamed as Bajaj Auto Ltd.
21] Vespa150 was a 150cc scooter.
22] Sunila George, Raghbendra Jha, Hari K. Natarajan, "The Evolution and Structure of the Two Wheeler Industry in India,", 2002.
23] LML is an Indian scooter and motorcycle manufacturer based in Kanpur, Uttar Pradesh.
24] Ape is a three-wheeled light commercial vehicle.

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