Piaggio Vehicles Pvt Ltd, a subsidiary of Piaggio Italy, started its operations with the launch of the Ape in 1999 and has been manufacturing three-wheeler commercial vehicles from its plant in India. The company’s three-wheeler vehicles, like the Ape, are known for their last mile connectivity, a term used in supply chain management that refers to faster and more efficient transportation of goods from the factory to its ultimate destination. The company also owns two-wheeler brands like Vespa, Derbi, Gilera, Aprillia, Scarabeo and Moto Guzzi.
Diego Graffi, CEO and managing director of Piaggio Vehicles Pvt Ltd was recently in Kathmandu and New Business Age caught up with Graffi to talk about the market, demand and expansion plans of Piaggio in Nepal. Excerpts:
Can you tell us about the demand for three-wheeler small commercial vehicles (SCVs) in Nepal and the growth of SCVs in the passenger and cargo segments?
2018 was a positive year for the automobile business in Nepal. We are focused on three-wheelers in the passenger segment and have penetrated the cargo segment with Cargo Petrol and City Petrol that we introduced in 2018. We want to venture and make progress on both the passenger and cargo fronts. Looking at the outcome and evolution of consumer demand in Nepal, I think the capacity, technology, product portfolio we are developing for the Indian market will also be suitable for the Nepali market. Our expectation for 2019/20 is responding swiftly to market demand and we are ready to cater this demand with our product offering.
It has been over a year since Piaggio started distribution of three-wheeler SCVs in Nepal. How has this period been in terms of growth and outlook?
We were present in the Nepali market before that as well. However, in the last 12 months, with the cooperation of MV Dugar Group, we have seen further market expansion. We have focused more on customers’ needs because, in the three-wheeler industry, you need to have a sharp mind to know what customers’ require. It is a vehicle used for professional purposes. Whenever a vehicle runs, customers lose money for its maintenance and repair. Therefore, quality technology and fast response in terms of customers’ needs are important. What we have seen with the cooperation with MV Dugar are service and its availability; we have taken a quantum leap compared to the past. We want to invest further in this direction.
The result has been quite optimistic in the last 12 months in the Nepali market. We are targeting a 40 percent market share in the three-wheeler industry across Nepal. We are seeing good growth, our outlook towards increasing market share, overall figures, sales volume and product gamma performance is very positive.
How is Piaggio expanding its presence across Nepal? How are you providing after-sales services here?
Piaggio products have the highest credibility. Piaggio is bridging the gap by making its three-wheelers available in remote areas of Nepal. We have over 51 outlets including our sub-dealers in Nepal. Through our workshops, we are always searching for the possibility to be closer to customers to provide faster service so they don’t have to travel long distances to get their vehicles repaired, which is another essential aspect for further assisting our business growth in Nepal. We have taken up the servicing aspect seriously as it is the principle Piaggio follows internationally. The initiative provided by Piaggio is a door-to-door and park-to-park service. Piaggio three-wheeler owners using the vehicle professionally need to make money on a daily basis and do not have the time to go to service stations. As a service-centric company, Piaggio is the only three-wheeler company in Nepal that provides services at the customer doorstep. In a year, we have done 190 activities at below the line (BTL) level.
How do you plan to expand in Nepal?
We approach the Nepali market with our Italian heritage and its grand legacy. There are limitations in a sense that three-wheelers are banned in Kathmandu. Our plan of investment to expand our product gamma plan in the next three years is more than INR 3 billion. It is one of the biggest investments made by Piaggio India but compared to our competitor Bajaj, it is quite relevant. The amount will be invested not only in vehicle renewal in terms of introduction of new contents and features but will also be invested in introducing new segments to improve our standing in the three-wheeler industry.
Our main pillar of investment will be the power train to expand our product offerings that are more compliant to the regulations that will be introduced in 2020. At the same time, our aim is to provide something that is not only respectful to the environment but is also efficient with better mileage and credibility. The products will be suitable for the Nepali market as well.
We expect in the next two to three years unless there will be restrictions on regulations regarding three-wheelers from the government, the positive trend of Nepalis will cause the growth of Nepal’s economy. We see bigger opportunities here in Nepal and in India.
Piaggio is known for its “Last Mile Connectivity”. How is it being implemented here?
Ape City Petrol is the main archetype of “Last Mile Connectivity” for passenger transportation in urban or extreme environments. Then we introduced City Cargo, which is suitable for the transportation of goods. These two products are doing fine. Following the same path, we plan to expand our offering in the next 12 months by introducing a new category of vehicles. As our focus is last mile connectivity, this is where we want to invest and be stronger in India and other markets.
How fruitful has the partnership with MV Dugar Group been?
Their cooperation has been incredible in establishing the image because the response we got from MV Dugar Group was swift. We have joined hands with a very reliable partner and we have planned our growth for the next three to five years.