If there’s anything Indians can relate to Italy after Sonia Gandhi and pizzas, then it’s definitely the mean machines from the Italian province. Be it FIAT, which found inroads into the Indian sub-continent for the third time and in its most recent run is doing reasonably well, all thanks to its new product line. What can’t be overlooked however is contribution of its much-popular brand Piaggio, which was once the market leader in the scooter segment in the country, with its JV agreement with LML. Today, Piaggio enjoys the numero-uno position in the cargo (Light-Commercial Vehicles, LCVs) as well as the passenger segments in the country. The elegant designs from Italy has ensured that the brand acquires many loyal followers in the country over time. In fact, the Vespa brand was one of best-selling brand in the Indian scooter market, giving stiff competition to companies like Bajaj during the 1980s & 90s. In fact, it was the Vespa brand that helped LML (the then, JV partner of Piaggio in India) move back into the black in 1991. By 1998, LML had become the second-largest scooter manufacturer in India with a market share of over 28%. However, after Piaggio called off its joint venture with the Kanpur-based LML in 1999, Piaggio confined itself to manufacturing of LCVs. Also, since then the Vespa brand has been reduced to only a case study discussing how a 40-year old brand had to exit the domestic market without a trace (as it belonged to Piaggio). So why are we discussing this right now? Well, this Pune-based Piaggio brand is considering options of launching two-wheelers in the Indian market after a long gap of around 10 years. “We are currently carrying out a feasibility study on our two-wheeler foray at the moment and the final decision will only be taken by year-end,” avers Ravi Chopra, Chairman and Managing Director, Piaggio Vehicles India. But will Piaggio be able to re-attain the glorified position that it once enjoyed in the Indian two-wheeler market is the real billion-dollar question.
Then there is another twist in the tale – Piaggio’s erstwhile better half, LML, has marked its re-entry into the Indian market in 2009 after it shut shop in 2006. The company, which is today operating under the scanner of the Board for Industrial and Financial Reconstruction (BIFR), has launched the NV brand once again in the Indian market. “We will be expanding only in the northern region of the country, as it makes more sense from the logistics point of view. Going forward, we will be expanding our footprint to other areas as well,” explains a source in LML. In fact, the company has clearly created plans in place to expand its product line to CNG scooters as well. But with Piaggio planning to come out with its products by 2010-11, it will only create more competitive problems for this already struggling two-wheeled aspirant. When asked, Chopra refused to comment on LML, but did pass off a line mentioning, “LML is now a sick company and is working under the BIFR scanner. I don’t think there is anything to talk about it...”
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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