Piaggio India proposes Rs 250-300 crore investment plan for the initial phase which would involve investments in setting up the plant infrastructure and rolling out the first product. Significantly, this move puts an end to all speculation regarding Piaggio’s re-entry into the two-wheeler market. After its controversial exit from the Singhanias-controlled LML in November 1999, Piaggio had made an abortive attempt to acquire the government stake in Scooters India.
Surprisingly, Piaggio is not looking at the high volume game but intents on being a niche player. “We will be a low key player and will certainly not be getting into any run-of-the-mill category,” said Piaggio India chairman Shekhar Datta.
He added that while the first model could be one from its international stable, it would be customised to suit Indian conditions. At present, Piaggio SpA markets its two-wheelers under the Vespa and Gilera brands across the globe.
Defending a relatively low-level of investment, Mr Datta explained that since the bulk of the work relating to R&D and feasibility studies were done by the parent company, thereby, substantially reducing the initial investment made by the subsidiary, it would not be correct to compare it with corresponding investments by Indian companies.
Analysts believe that Piaggio will make its foray in India with a high-end scooter model. Recently, Bajaj Auto had also conducted a feasibility study on this segment and subsequently dropped the idea, finding it unviable.
Even Kinetic Engineering’s high-end scooter models like ZX Zoom at Rs 38,000 and Marvel at Rs 40,000 have also not had a smooth ride due to the availability of entry-level motorcycles at that price band.
The Delhi-based company has been conducting feasibility studies and setting up vendor and dealer networks and working on its supply chain system over the last nine months.