Wednesday, June 9, 2010

Vespa Set to Come Back by 2012

The name which became synonymous with scooters during our teens, Vespa, is all set to make a comeback in probably the most luring and profitable two wheeler markets, India. The Italian company Piaggio, makers of Vespa line of scooters, has finally decided to re-foray into the Indian market and this time as a fully owned subsidiary. The company would be investing around 30 million rupees over two years to set up a plant with a production capacity of 1.5 lakh two wheelers. The strategy and plannings of the operation of the company have been discussed on the higher scale for sale of two wheelers in the Indian market.


Piaggio entered India during the 1960s in collaboration with Bajaj Auto for the first time. After license rejection in 1971 due to India’s privatization initiatives, LML had to break their alliance with Bajaj. After more than a decade Piaggio returned back in 1983, this time with a new Joint Venture, LML and a competitor to Bajaj Auto. Vespa brand of scooters enjoyed a cult status in the Indian market with superior engines and greater fuel efficiencies. However, due to disputes arising between partners, LML procured Piaggio’s stake in 1999 resulting in the conclusion of the JV. More than a decade later Piaggio is planning to foray into the Indian market yet again. The difference this time, however, would be that Piaggio would enter the India market as a fully owned subsidiary of the Italian firm.

The first scooter from the firm would be the 125cc Vespa LX 125 which is capable of producing 10bhp of power and an equivalent amount of torque and would be out by end of 2012. The scooter is touted to come loathed with a host of other features like disc brakes, self starts, clock, oil indicator etc. This news comes at a time when motorcycle sales have been dominating scooters in India and (once) major players like Bajaj bidding good bye to the scooter market. Currently, Honda Motorcycle & Scooters India is the market leader in scooters with a market share of more than 50 percent in a market where Scooters enjoy a minority stake pegged at around 15 percent among all two wheelers. Piaggio is expected to concentrate more on bigger segments contrary to HMSI’s current ploy. It remains to be seen whether this oncoming of Vespa would spell the same cast it did during their first two stints.

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