“Reaching the 2.5 million mark is also a big motivation for us to try and reach the next goal of 3.5 million vehicles in the shortest time possible.” - Diego Graffi, MD & CEO, Piaggio Vehicles Private Limited

Pioneering new technology
Piaggio has introduced the new water-cooled engine technology in India recently. Graffi is quite excited about this as Piaggio is the first player to introduce this kind of technology in the Indian three-wheeler market. "This engine has been developed in partnership with our long-term partner Greaves Engines. This is a state-of-the-art technology, which offers a lot of advantages to the customers in terms of performance as well as total cost of ownership. It offers 10 percent to 15 percent better fuel efficiency compared to the regular CNG / LPG. While we are the first one to introduce this technology in the market, my expectation is that others will soon follow," he says. Of course, earlier, there used to be some kind of psychological barrier with regards to using this technology. "However, today we can say that in terms of efficiency, performance and total cost of ownership, this technology is at par with diesel or even better. Therefore, my perception is that more customers will reconsider their diesel choice and will decide to go for water-cooled engine technology," Graffi explains.

Transition to the Bharat Stage VI
Graffi acknowledges that it is definitely a big challenge for the overall automotive industry including for the two-wheeler segment. "We are working on and are on track to take our complete powertrain range to Bharat Stage VI homologation well in advance of the deadline of April 2020. We are planning to have our entire range ready for production by November 2019," he says with confidence.
Graffi knows that this is a huge challenge from the technology point of view. "I am sure you are aware that the reduction of pollutants from Bharat Stage IV to Bharat Stage VI is much higher than what we experienced from Bharat Stage III to Bharat Stage IV. So, we will require an advanced kind of fuel injection technology that has not been used so far at least in the two-wheeler industry. But overall, I look at this change quite positively as it will provide the customer not only with a clean and much more efficient powertrain solution but will also be beneficial to the environment," he says.

Baramati manufacturing plant
At Baramati near Pune, Piaggio India has three key manufacturing assets. One is for the small commercial vehicles where it produces the three-wheelers and the four-wheelers. Its annual capacity is about 50,000 vehicles per year. "It is quite flexible and at the moment we do not have any plans to increase our capacities there. The plant is quite technologically advanced. For example, it has an automatic welding line and it is a big step ahead in terms of production efficiency as well as accuracy with regards to tolerances. With that unit, we are fully covered for the next three years for our manufacturing needs," Graffi informs. The second asset in Baramati is the engine plant, which is relatively recent. "It was originally meant for the production of our scooter applications. Then, we also produced our four-wheelers there followed by the diesel engines for the four-wheelers. We plan to expand this unit's capacity in the next 24 months. I do not have the exact figure with regards to the investment planned for expansion, but I can say that it is more than Rs.100 crore," Graffi shares. The third asset is the two-wheeler plant where Piaggio manufactures its Vespa and Aprilia brands. The installed production capacity at this plant is 1.5 lakh vehicles per year. "We are not so far from that number at present and we hope to reach saturation in the next three years. Then, we will see what is required," he says.

R&D & new products
It was interesting to know that the concept, design and production for all its commercial vehicles is done here in India. "We do have some support from our Italian plant because we have some production happening there. However, the main R&D center for commercial vehicles is located here in India. Part of our R&D activities happen here in Pune and part of it happens in Baramati. Of course, the R&D for four-wheeler and two-wheeler happens in Italy," Graffi states.
With regards to the existing product mix in the SCV segment, Graffi says that Piaggio India has already done a lot of things in this context in the last 14 months. "I would say that we have done good renewal of our product line. Yes, we do have some products in the pipeline for the next 12 months not just in terms of renewal of products but also in giving more variety to our customers in terms of applications. Of course, our existing product line is definitely state-of-the-art in comparison with our competitors," he says.
In the two-wheeler segment, Graffi does acknowledge that Piaggio India still has a long way to go. So, a lot of new products can be expected on that front. "Some of these products were already showcased at the Auto Expo 2018. Although we are a little behind in the two-wheeler segment since we started a bit late, but we will soon have a complete product gamut within the next 24 months," he adds.

Personal journey
It has been just over 14 months since Graffi has taken charge as the MD & CEO of Piaggio India. And he calls his personal journey so far - completely amazing. He points out that he comes from a completely different background - that is manufacturing and procurement and hence this has been a new and good experience. "India is not new to me as when I joined Piaggio in 2005, I started travelling here quite frequently. I was partly responsible for building our local base in India not only for the domestic market but also for the exports market. So, I also have a good relationship with the local vendor base for the last eleven years. Getting appointed as the Managing Director was a pleasant surprise for me as my affection and interest for India is quite high. Of course, I cannot say that I am feeling at home but nearly like that! Luckily, the team we have here is quite young and motivated. The good thing is that India is growing as an economy. So, what can you ask more?"

Baramati and Pontedera
Since Graffi has significant experience with manufacturing, I could not resist the temptation of asking him to compare the manufacturing infrastructures in Baramati (India) and Pontedera (Italy). I was quite happy with the honesty with which he answered the question. Of course, he started off by highlighting the very strong partnership between Italy and India in the last twenty years.
"So, if you visit our manufacturing facility in Baramati then you will find many assets similar to our Pontedera plant in terms of technology, machinery and so on. This is mainly because of the strong bond between these two locations. Not withstanding that, my personal experience is that the level of technology and manufacturing assets in Baramati are very high. I also have a lot of experience in China and Vietnam and I see that the level preparation and the level of technology application in the last three to five years with the vendor base here is quite high. Our overseas plants are now importing a lot of important components from India as the level of technology, quality and value-added is the same."
Baramati's high level of manufacturing sophistication definitely is in line with Piaggio's vision of developing the India operations as an exports base.

Vision 2020
Finally, I ask him about his vision for Piaggio India and where he would want to see it by 2020. "My first goal is definitely to match this big challenge of Bharat Stage VI transition very effectively in terms of technology, cost and competitiveness. I want the organisation to become capable to take advantage of this transition and to give something more to the customers. I would also like to see more and more high level of Indian managers taking charge at Piaggio India," he says.
Graffi also sees a positive time in 2018 as well as in 2019 for both of its business pillars. "I also want this organisation to become more fast and effective in terms of decision making in all aspects. I would also like to give more opportunities to our young talent to understand what Piaggio makes and the kind of legacy we have," he signs off on a positive note.
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