Piaggio Announces New Phase of Growth in Asia

As the world's largest market for powered two-wheelers (PTWs)—it takes more than 80% of global production—Asia has been attracting intensive attention from international PTW makers. Among them is Piaggio, the largest Italian PTW manufacturer, which is striving to boost its business in the region.

The top four Japanese manufacturers--Honda, Yamaha, Suzuki, and Kawasaki—have controlled the regional market for more than five decades with their superior marketing, competitive products which are more affordable than European and American brands, and well-deployed local manufacturing sites in most big Asian markets.

Now, with improved incomes, Asians are likely to be looking for different products and other brands. Piaggio plans to be their No. 1 choice.

In early April the Piaggio Group announced, in Vietnam, a new phase of growth in Asia involving an important expansion of its manufacturing and sales operations throughout the area. The group is targeting revenues of approximately one billion euros in Asia within four years.

The announcement was made by Piaggio Group Chairman and CEO Roberto Colaninno during the inauguration of a new site for the expansion of the Group's Vietnamese plant (boosting it from the current 26,000 square meters to approximately 50,000 square meters) near Hanoi.

Piaggio said that it would set up its first Asian two-wheeler R&D center on the site, and that it plans to treble the plant's annual production capacity from the current 100,000 scooters to 300,000 to meet a surge in demand for two-wheelers in Vietnam and other Southeast Asian markets. In the Vinh Phuc area, where the plant is located, the Piaggio Group will also build a scooter engine plant with an annual production capacity of 250,000 units.

Colaninno said that thanks to the extraordinary success of Piaggio's initial investment in Vietnam, the group is now moving into the second phase of its growth strategy. The new expansion is part of that strategy, which sees Asia as the main growth area for the Piaggio Group over the next few years.

"In recent years we have seen a sharp increase in demand for two-wheelers in Asia, especially in Vietnam, Southeast Asia, and India," Colaninno said. "I am convinced that demand will continue to grow at a healthy rate over the coming years, in parallel with the rapid urbanization of the main Asian nations and rising consumer spending power. The Piaggio Group is poised to reap the benefits of this growth."

So far the Piaggio Group has invested a total of 30 million euros in Vietnam, and the recently announced expansion calls for the input of another 150 million euros in Asia between 2011 and 2014. Approximately 60 million euros will be spent on expansion of the Piaggio Vietnam Company's plants, and 90 million euros will go to the Group's Indian subsidiary, Piaggio Vehicles Private Ltd., to finance growth of both the commercial vehicle and two-wheeler businesses. In 2012, the group plans to launch production of a Vespa scooter developed especially for the Indian market.

The new R&D center in Vinh Phuc will work on new vehicle concepts and new engines to cut fuel consumption and emissions, factors of particular importance for Asian consumers.

Since the start-up of its Vietnamese production in June 2009, Piaggio has sold more than 100,000 scooters in the Asian market. Now the group is ready to respond to growing scooter demand in Indonesia--where it recently established a new sales company--and in Taiwan, Korea, Malaysia, the Philippines, and Australia; and in Thailand, where Piaggio debuted its scooters at the Bangkok International Motor Show.

For the Vietnamese market, the Piaggio Group is offering a range of two-wheelers powered by four-stroke 125cc and 150cc electronic injection engines, delivering cutting-edge ecosustainable performance. The company will also be launching the Fly compact scooter and a new model of the Zip 100, at a particularly competitive price, re-designed specifically to address the needs of Asian consumers.