Vespa maker set for Indian return

Italy's Piaggio is to reintroduce the Vespa into India's two-wheeler market as part of a wider push into Asia after what will have been an absence of more than a decade.

The company said on Tuesday it would release its first scooters in India in 2010. It is aiming to tap into rapid growth in a market in which it was a dominant player until an earlier two-wheeler joint venture with India's LML collapsed in 1999.

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"We want to come here with the Vespa and maybe introduce some of our other scooters," Roberto Colaninno, Piaggio chief executive, told the Financial Times in Mumbai on Tuesday.

Piaggio will be returning to a very different market from the one it left nine years ago. Sales have risen sharply, with producers selling more than 7m motor-cycles and scooters in the year ending March 2007.

But the Italian producer will face fierce competition from existing two-wheeler producers and from a slew of small cars being developed by automakers, such as Tata Group.

India's motorcycle market is dominated by efficient producers led by Hero Honda, a joint venture involving Japan's Honda and number two-ranked Bajaj, a domestic producer.

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To overcome lacklustre sales in Europe, Piaggio is investing not only in India but also in China and Vietnam to lift Asia's contribution to total sales from about 20 per cent currently to up to 35 per cent by 2010.

The group's preliminary sales estimate for the Asia-Pacific last year was euro 290m ($424m, pound 216m), up 18.4 per cent from a year earlier, with India accounting for euro 238m, up 15.3 per cent.

While Piaggio has been absent from India's two-wheeler market for some time, it has built a growing presence in the country's so-called "mini-truck" market with its three-wheel Ape diesel passenger and cargo vehicles.

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Mr Colaninno did not give details on the capacity of its planned two-wheeler factory but indicated the company might incorporate a new hybrid engine in the scooters it eventually sells in India.

"We don't want to sell products that will compete directly with Honda," said Mr Colaninno.