Standing in front of one of his company’s most coveted products, a curvaceous 1100cc Moto Guzzi Grizo, Piaggio chairperson Roberto Colaninno admits he has never actually ridden one. ”I’m too scared; I’d kill myself in five minutes,” he laughs.
Colaninno took control of Piaggio in 2003 and has since transformed it from an ailing icon into a profitable company, with prospects of breaking into emerging markets such as India and China. He says he was drawn to the company, whose other classic Italian brands include Vespa Aprilia and Gilera, not because of the desirability of its products, but rather as what he matter-of-factly calls an ”industrial investment”.
The 60-year-old, who was the chief executive of Olivetti in 1999 when it launched its successful takeover of Telecom Italia, has turned the company around based on a combination of cost-cutting and the introduction of new products, such as the MP3, a three-wheeled scooter that was shown in the United Kingdom for the first time this week.
Piaggio’s earnings before tax have almost doubled under Colaninno’s tenure, from â,¬93,7-million in 2003 to â,¬184,8-million last year. On the back of the turnaround, Piaggio will next month float on the Milan Stock Exchange.
The company was founded in Genoa in 1884 by aircraft engineer Enrico Piaggio and, until World War II, was involved in almost all aspects of transport manufacture. But it was with the introduction of the Vespa (meaning ”wasp”), the world’s first scooter, in 1946, that Piaggio made its name. Immortalised in such cult films as Roman Holiday (the company showed clips of some of the films on a big screen tele-vision at the launch of the MP3), they were made popular — and notorious — in the UK in the 1960s by Mods (gangs of sharp-suited youths). Scooters still account for more than half of Piaggio’s revenue.
Morgan Grenfell acquired the company in 1999, but by 2003 it was in serious trouble. There were big quality problems, productivity was low and costs were too high, all of which combined to make it difficult for Piaggio to compete with its bigger Japanese competitors. Colaninno took over Piaggio through holding company Immsi, which remains its majority shareholder (Morgan Grenfell will sell its remaining stake of about 20% after the initial public offering).
Some of Colaninno’s innovations were banal but effective: he put air conditioning into the company’s antiquated plant in Pontedera, Tuscany, which resulted in a big increase in productivity. Through the acquisition in 2004 of Aprilia, the Italian sports motorcycle brand, the company has also benefited from economies of scale.
Colaninno also reduced the time it takes the company to turn an idea into a finished product, essential in a business that, as he admits, is largely dependent on fashion. ”It’s not a car,” he says. He adds that whereas car customers will often switch brands because of price, with scooters and motorcycles it’s different. ”You don’t want another one,” he says. ”You want this one.”
He says the timing of marketing is also all-important: it is no coincidence that the MP3 is being launched in the UK in summer. The unique feature of the new 125cc or 250cc scooter is that it has two wheels at the front, giving it greater stability and thus making it safer. Piaggio is also developing a hybrid version of the Vespa, part of its attempt to capitalise on demand for more environmentally friendly vehicles (in the 1980s, the Vespa’s dirty two-stroke engines were actually banned in the United States).
Ultimately, however, Colaninno is looking not to Europe and North America, but to Asia. ”A billion people there decided to change their lifestyle, to become rich,” he says. ”The customer is there today, not here. If we stay out, we will have no future. Some day, we will be finished.”
In India, a country as scooter-mad as Italy, Piaggio sells cheaper versions of its three-wheelers and four-wheelers under the Ape (meaning ”bee”) and Quargo brands. It has a wholly owned plant near Mumbai that produces 100 000 vehicles a year. However, despite his enthusiasm for the Indian market, Colaninno is just as reluctant to try riding one of Piaggio’s scooters through the streets of Mumbai as he is to jump on a Moto Guzzo.
”I think for a European it is impossible,” he says. — Â