In conversation with Diego Graffi, Managing Director and CEO, Piaggio India and Ashish Yakhmi, Head of Two-wheeler business on the future of Aprilia and Vespa in India
As told to Sirish Chandran
Sirish (S): Let me start with how has the business been for Aprilia
Diego Graffi (DG): 2018 has been quite positive. As per our plans, we are growing 20 percent year on year for both brands Vespa and Aprilia. Vespa has done extremely well and it is the first year that we have crossed 50,000 in sales in India and the export market. But also Aprilia did very well and we nearly touched 40,000. So overall, I would say that year has been quite positive for us. We are just concerned about the last two to three months of the year, we have slowed down and entire market has slowed down. But overall, I would say that 2018 has been positive. We began 2019 not in line with our plan and we are expecting better, but we are at par with last year. We have good potential for growth so we hope with respect to that, the second half of the year will be better than last year.
S: You’ve been very slow to introduce new models whereas your competition has been introducing new models one after the other what is the reason for that?
DG: Our philosophy has always been not to run for volumes or big sales. We are very strong brand, Vespa and Aprilia, are the some of the strongest brands in the industry and when we introduce any new brand first we want to establish the reputation of the brand. Definitely the network expansion is passing through a clear certification of every outlet that we are going to open, every outlet has to respond to certain criteria or we are not interested. From what we are reading on social media, we see that both brands are very well appreciated. Our customers’ word of mouth is definitely very good which means that we are following the right model. We want to grow, and grow at the right pace. We are not eager about volumes and we want to create our growth and establishment in India market with the right approach.
S: What is your network strength now?
DG: More than 200 plus as of today, and we have doubled our network strength in the last 18 months.
S: How many Motoplex outlets do you have?
DG: All of them are Motoplex – the look and feel is almost the same. The only difference is that not all of them are selling superbikes, only four or five are selling superbikes while the other ones are more or less same wherever you go.
S: On the big bike front, when are you going to start local assembly?
DG: Again it is something that we are thinking about, we are planning to introduce our sportbike for Aprilia brand in the next 24 months and will be definitely assembled in our plant. This will be our first product. The high-end bikes we are looking at, but at the moment, they are not in our priority we want to focus on scooters and we want to focus on sportbikes but not high-end bikes. This is our priority at the moment and then whenever is the right time, we will think about high-end bikes, but not immediately
S: The sportbike is the one that was shown at the Auto expo?
S: That is a very long gestation because the Auto Expo was two years ago and you are talking another 24 months, so that’s like four years.
DG: Again we are not in a hurry in the sense that it is easy to take a product and localize and sell – we have lot of products in our portfolio so it is not difficult to take that to India. It is not only the matter of having the product and the manufacturing unit. It is also a matter that the right selling proposition applies to the product. The network must also be ready as selling a scooter and selling a bike is not the same kind of task and so we want to prepare the network, so that whenever customer is coming asking for bike, they should be answered properly and assisted well. That is why we are taking our time
S: For the Indian biking enthusiast this gives the impression that Piaggio group is not very aggressive in India in the two-wheeler space, what they are doing in the three-wheeler space is completely different. It seems like now you’ve been here for two-wheelers for a fair amount of time but your presence is very small.
DG: It depends on what you compare yourself to in the sense that if you compare to the entire two-wheeler market in India, we are small. If you compare ourselves with a certain category of vehicle or a certain competitor, our market share is in the range of 9 to 10 percent. If you go 125cc and above – more or less the market valuation is 1 million units and we are nearing 1 lakh so we are 9 to 10 percent. That is not being small. Again, we are not eager for volumes we want to first introduce the network and the brand reputation and then consequently introduce new products. We have our plan and we are sticking to our plan in the next three to five years. We are definitely not aiming for a million units, this is not our mission not only here in India but all across the world. We want to be seen as a premium player, we want that the customer coming to us is looking for a particular kind of product, they are not comparing us to anybody – this is our aim. I think so far we have been accomplishing this and this is also the philosophy that we want.
S: You can be premium with little more visibility.
Ashish Yakhmi (AY): Visibility, first of all past two years we are growing like not as slow as how slow the industry is, we are growing much faster. Secondly, we are much more visible on-ground. Many more vehicles are seen on-ground and the network has more than doubled in the past one and a half years. We want to do it the right way, not just launch variants and call them products and get into any kind of dealership for a network. For example, every one of our dealerships looks similar nowadays. The size may vary depending on the market. And obviously we are a very strong brand as he unless it’s a strong brand, we should create ethics and and good quality. Our Vespa and Aprilia lasts much longer when a consumer buys it than the regular two-wheeler scooter so all of these are more important to the company philosophy rather than just making models
S: Do you have any data to show that your resale values are higher than the competition?
AY: Yeah, we have data, any of our products lasted for 1 and a half times more than our competitors. So the original buyers – a big bunch of them are still here. These 2012,13,14 buyers, we see through service data. That’s really the big thing.
S: Do you see any threat from e-scooters and do you have any plans for e scooters
DG: Threat, no in the sense that I think that there will definitely be a revolution in the Indian market towards electric mobility in general not only scooters, but buses and cars. We have seen lot of news coming but that will happen around 2023-2025 but we do not see these as a threat, as we have a technology where we are already producing electric two wheeler outside India. Whenever it is required, we can introduce the technology and start producing. Again it is not just a matter of product, it is a matter of sale proposition, how we are going to justify to the customer why he has to pay a certain amount more for getting an electric vehicle because there is big price gap between the two. Not only that, we also have to see if the network is ready for selling the electric scooter do we have the infrastructure for that. So there is a complex method that is going beyond the product itself, related to the total environment that these kind of vehicle are going to utilize so I do not consider it a threat personally, but again we are not in a hurry. The philosophy that we have is always to rely on our technology. Luckily we have our own technology, we have the know-how and whenever we are going to introduce an electric scooter in India, it will be based only on our technology
S: If you had to predict when electric scooters will become really popular in India that would be how many years from now?
DG: It depends very much on what would be the trend in the policies, the governments, the mandates and the subsidies and these kinds of things. If you had to stick at what we read in the newspaper recently, by 2025 all two-wheelers below 150cc will be electric so this is a scenario you cannot avoid if you want to sell a two wheeler. If it is different from that, the trend of growth would be different. Personally, I am not in favour of any kind of imposition. I think that you have to leave the choice to the customer to whatever he wants, and provide the vehicle that is respecting the rules and regulatory compliance provided. I personally think that the customer should be left free to choose whatever suits him. But that is definitely a trend that we are expecting in the next three to five years, there will be exponential growth in electric mobility in India not only limited to two wheelers.
S: Have you any plans for motorsport in India?
DG: Motorsport, definitely since we are doing competition with our scooter SR and we are winning quite regularly against the competitors and let me say this is mainly driven by our philosophy. Mainly it is product driven, for example talking about sportbikes we plan to introduce sportbikes in the next month so we think that the brand that we have namely Aprilia is very much suitable for this.
AY: The sports is just really far away in India its not developed as much
S: No motorsport is big actually especially in the two-wheeler space. In the four-wheelers, okay it is not very accessible but bikes are very cheap an a lot of people are into it
AY: That’s where the scooter races are there. In fact, the SR is winning quite regularly but what we are talking about is the motorsport likes of the GP. On a local level, we’re looking at how do we build our brand’s credibility for that and we have some ideas. People in India have started following our GP presence we have an Aprilia community culture at a global level we are complementing that culture in a website format it is there and lot of people from here are following that, so they are maintaining a followership structure in the global format
S: Do you have an Aprilia community in India
AY: We have the global community with followers from here. The global strategy about community is through Aprilia global community as we have seen lot of traction from here to there so whatever activities we are doing is adding our customers on that platform.
S: Just a few personal questions to give a background to who you are? What bike do you ride
DG: I have two bikes Aprilia Sr and Shiver 900
S: Do you ride in India
DG: Oh regularly
S: Is it close to Italy in terms of the chaos?
DG: The driving style is very different in the sense that people do drive a little bit fast because I am not a very fast driver but I like to ride bikes. Obviously in the city, the average speed is much lower than Europe but the only thing that I do not like is the speed-breakers apart from that it is very fun.
S: The bike that you would like to own?
DG: I have the one that I have: Shiver 900
S: Which manufacturer outside the Piaggio group do you admire
DG: Lets see, bikes are fun and I like Triumph and I am attracted by retro style. The Triumph Scrambler is a product which I would definitely like. I also like BMW bikes very much and Ducati too, even though it is our competitor but I have a lot of friends who work in Ducati. In general, I like European products much more rather than Japanese to be honest.
S: Your personal preference Road riding or off-road
DG: The road, off-road requires skill that I don’t have and it is also very dangerous
S: Finally, how has your journey been in India? What were the challenges and what are the opportunities that you see?
DG: It has been two years in India at the end of this month, and definitely I would say that it has been fantastic not only in terms of business but personal also. India is growing at a fast rate GDP is 7 per cent higher than China and you see it every day whenever we are going to a mall or a restaurant, we see that there is hunger for growth for everybody and it is very dynamic country is what I like the most.
S: What is your biggest challenge for India?
DG: The Challenge definitely for Europeans is that my culture is different. I do not say that it is a challenge – it depends on what is the kind of attitude that we have and the behavior that we have. If you want to impose your own way of thinking, then that is a challenge. If you adapt yourself to how the culture is over here, then it could be fun and personal growth also.