What a new factory in Vietnam means for Piaggio

Piaggio officially cut the ribbon on its new engine assembly plant in Vietnam today, a move which will see it ramp up scooter production to 300,000 units annually in that country. Piaggio Vietnam produces both Vespa and Piaggio scooters for the Asian market and this plant is part of a massive expansion on that continent. By 2014, Piaggio forecasts that its annual volume will exceed 1,000,000 vehicles a year, with 50 percent of its revenue coming from asia. In comparison, the entire on-road market in the US was just 565,000 motorcycles.

“Today is a very important event for our Group. It is based on the success achieved by Piaggio Vietnam since 2009 and lays the foundation for a new phase in our expansion strategy in South East Asia,” states Piaggio Group CEO Roberto Colaninno. “The results reported by the Piaggio Group last year validate our global growth strategies, which identify Asia as the key to Group growth in the next few years, by virtue of the rapid urbanisation of the main Asian nations and rising consumer purchasing power.”

The plant will produce 125 and 150cc engines for Vespa models and the Piaggio Liberty and Fly scooters sold in Southeast Asia. Piaggio has already built 180,000 scooters in Vietnam since production began there in 2009.

“These are four-stroke, three-valve 125 and 150cc engines with [fuel economy of 144mpg, US], whose emissions and fuel consumption are among the lowest in the world,” explains Colaninno.

To reach that 300,000 scooter volume, Piaggio plans to invest €70 million in Vietnam between now and 2014.

This factory is just the latest in a massive, industry-wide shift in motorcycle production. For the last half century or so, most of the efforts of bike manufacturers were focussed on catering to the large-capacity western markets in North America and Europe. The 300,000 scooters annually number isn’t necessarily the big news here — there’s always been a lot of little bikes sold in Asia — but rather its the 50 percent of revenue thing. Piaggio is a western company that’s hitherto chased western companies. That’s changing and it’s changing very fast. Piaggio isn’t alone, even that most premium of premium bike makers, Ducati, is opening up plants in the far east and designing products specifically for markets there. Motorcycle companies industry wide are forecasting and chasing growth not in America or Europe, but in India, Thailand, Vietnam, China, Brazil and other developing markets.

comments powered by Disqus