Piaggio is much more than Vespa: MD Diego Graffi

You recently rolled out superbikes. Seems that you are happy with your premium play…

Premium is our niche. But I must point out that premium is not directly related to price.

Though it’s very easy to associate premium with high price, it’s not. Premium is about customer experience, it’s about the care and attention to details, design styling elements, riding performance, and handling of the vehicle. Premium is how a customer feels when she enters our outlet. For us, premium is also about the preparedness of sales people, dealers and the way the vehicle is displayed and delivered. Premium is about staying differentiated. This is what we want to provide to our customers.

The two-wheeler market too has evolved a lot over the last few years…

Indeed, it has. I joined Piaggio India in 2017 and the two-wheeler market has evolved exponentially since then. Now most of the players have 125cc in their portfolio. It was not the case when Vespa re-entered the space in 2012. We were the first ones. Now we see some of the players even rolling out 150cc products. The nature of the scooter or two-wheeler market has evolved from being daily commuting to one meant for long rides also.

An increase in size and comfort of the vehicles is also visible. A lot of attention is being paid to connectivity like interaction of the vehicle with their rider through an app and mobile. All these things were completely unknown five years ago. The market is expected to evolve at an even more exponential pace in the future. I definitely see space for bigger engines, bigger vehicles and higher digital content, which makes vehicle proposition in India more or less to the kind we see in Europe. So that the gap that was quite visible maybe five years back has now become very small.

Did the market evolve because buyers also became more mature?

Yeah. When I entered India, the main point for scooter consumer was mileage, and reliability of the vehicle. In fact, mileage was at the top, and then came price of vehicle. Now it is no longer about mileage. Characteristics, style, design and engine performance are as crucial as mileage. Interestingly, findings of some of our recent consumer surveys suggest mileage and prices and not among the top priorities. Though they are still important, they are not the main driver for consumer while buying a vehicle.

So this explains your timing in launching superbikes in India…

We are not yet planning to do local production superbikes because see their volumes are small. But they are picking up rapidly. We are impressed with kind of response that we got so far. The kind of enquires that we received from customers is overwhelming. We have increased orders to our manufacturing plant in Europe for more bikes. So, definitely the pace at which India is moving is fast. But if you see, bike proposition of 1000cc engine was already there. Now we see a movement in the direction of mid-size range—400cc to 750cc. This trend is very much visible, and will only pick up in the future.

What about the demand for EVs? Would you enter into the two-wheeler space with an electric vehicle?

I have quite a lot of experience in the automotive space in Europe and the US. But what has impressed me most is the EV push that is here in India. Central and state governments have been convincing OEMs [original equipment manufacturers] to shift to electric mobility through incentives.

Look at FAME I and II, it is definitely one of the best incentive schemes that we have globally for electric mobility. In fact, I do not know any scheme similar to it across any part of the world. Then there is PLI scheme, which is again a push towards clean technology and energy. If I am not wrong, at least 12 states now have EV policy in place.

So clearly there is an overall push towards clean mobility. What does this mean for OEMs in India, whether two-wheeler, three-wheeler or four-wheeler, that they too must think about going electric. To stay and keep playing in this market, electric play is becoming a must. As far as electric two-wheelers are concerned, demand has definitely jumped 4x or 5x over a year or so.

You first went electric in autos. Any plans for two-wheelers?

We entered into the electric space towards the end of 2019. We are definitely looking at electric two-wheelers. In fact, we displayed Vespa electric in Auto Expo 2018, but the pandemic disrupted our plan a bit. Now we are working on it again and hopefully we will enter electric space with scooters.

EV used to be an option for OEMs. But that’s in the past…

There was a time when entering into EV space was mostly a way to demonstrate your willingness to innovate. So if one wanted to be perceived as an innovator, one would invest into electric.

We took a call to enter into this space not because we wanted to be perceived as innovators. It’s because we expected and anticipated shift to electric to happen at a fast pace. Now in terms of cost, electric definitely has an edge over fuels like petrol and diesel. If you want to survive, you have to have an electric vehicle in your portfolio.

Look at the pace at which our electric three-wheeler has grown. The percent share of electric has gone from zero to 15 in just six months! And it is expected to grow even faster. So, if you want to play in this field and maintain your competitiveness, you have to invest into the technology. One needs to have a right product proposition with an electric solution. It is a must.

Is that the reason why global players like Fiat couldn’t succeed in India? You have had a long stint at Fiat before joining Piaggio…

In India, Fiat was not a success from any point of view. Whenever you are entering India, you need to enter the market with a product proposition made for the market. The strategy or thinking that what has worked outside will work in India as well won’t work.

Fiat introduced products that was very successful in Southern America. In fact, in Brazil it was once the bestseller. But as I said, what has worked abroad might not work here. I feel this is a common mistake that many global companies have made.

How different was your approach when you re-entered in 2012 with Vespa?

Back then, premium play was definitely much ahead of the time. We have been here since more than two decades. In 1998, when we entered India, we did so with a three-wheeler product—Ape—which was designed for the Indian market. We introduced the cargo concept, which was not here. Back then, three-wheelers were typically meant for passenger transportation. We created three-wheeler market for transportation of goods, which was new and then others followed.

We then introduced the diesel version, again first ones to do so. At that time, there was a massive need from consumer for vehicle which was affordable in term of cost, kilometre, and cost of ownership. Today, we are the only player in India in three-wheeler that has a petrol and CNG offering which is equivalent in term of performance as compared to a diesel one. So, we have always anticipated, and this is what has made Piaggio successful in India. We never followed others but anticipated the changes or what others maybe thinking.

Another example of how our India strategy was customised for the country was that when we entered into electric three-wheelers, we opted for battery swapping. This was completely new for India. All the other players were offering fixed-battery solution. We introduce swappable battery and invested in this solution, and it has been a success.

Similarly, with Vespa. In 2012, premium scooter was a new concept. But we were trying to anticipate the future changes and transition. We tried to anticipate the needs of the consumers; we tried to figure out what might work for India. This is what has driven our success so far, and we will continue to do it.

Being first in any segment also means fair share of learnings. What has been your top ones?

It has been many at two levels: personal and professional. For me, though, it was less of a learning and more of a confirmation. I always believed that India is poised to evolve and grow at an astonishing pace. And so far the growth has been impressive. I do not know any other nation where things happen and change at such a fast speed. EVs would be one example. Another example is the pace of which transition was made in emission norms.

Five years back, India lagged with its global counterparts, and the gap was huge. Now this gap is nearly zero. As a company, the top learning has been to stay nimble, act quick and be open to changing business strategies to the new normal.

Speed indeed matters in India. Can we finally expect Piaggio to speed up its volume market share?

The answer is obvious. It’s a yes. Over the last decade, we have had our share of challenges: Premium product and positioning; looking for value rather than volume; and competing in a market where mileage and affordability were driving companies. We came with distinct product and a differentiated philosophy. Expanding dealer network and increasing penetration also took us time. Now we are we in a position where we can look at churning out volumes. I think we can easily target volumes in the range of 1.5 lakh per year. That is definitely our mission. It might even touch 2 lakh.

Rolling out more brands from Piaggio stable also conveys the message that Piaggio is not just Vespa…

Yes, we are much more than Vespa. I am impressed by the growing awareness about a brand like Aprilia. It was almost unknown in 2016 in India. Now people know and talk about it. This is what keeps us motivated. We want to expand our presence as well as our product portfolio. We would like to be perceived not only as an innovator, but also a player that is present in commercial space and two-wheelers.