Nov. 10, 2008 – Piaggio USA’s sales surge

High gas prices, an enlarged dealer network and an unprecedented level of media coverage on scooters led to a huge year of growth for Piaggio Group USA.
The company says its retail sales of scooters and motorcycles in the United States grew by 81.1 percent from January-August. During that time period, Piaggio Group USA sold 18,894 vehicles, compared with 10,435 in the first eight months of 2007.
The company also reported a strong improvement in market share, which reached 27.3 percent of the scooter segment in 2008 (January-August), compared with 17.4 percent in 2005. According to Motorcycle Industry Council data, Piaggio’s share of the total U.S. two-wheeler market was 2.6 percent, up from 1.1 percent in 2005.
Paolo Timoni, president and CEO of Piaggio Group USA, pointed to the three factors — gas prices, media coverage and more dealers — as the keys for the sudden growth.
“As you know, this year as we moved into the spring we had a sudden increase in gas prices, and that caught people’s attention,” he said. “But an unexpected result of this, and which was another big factor, was the tremendous media coverage scooters received. And finally, we continued to expand our dealer networks, and this year we finally started to see the fruits of those efforts from our efforts to expand our network in 2006 and ’07.”
Gas price hangover?
Timoni says although Piaggio has seen a slowdown in retail sales activity in September and October, the company believes the result is due more to the turmoil on Wall Street and the economy rather than the decrease in gas prices.
“As we reminded everyone at our recent dealer meeting in September, there are three basic drivers for scooter sales. One is high gas prices, the second is concern over global warming and the emission of carbon dioxide and other harmful gases, and third is traffic congestion,” he said.
Timoni says these three elements can be of different importance in certain areas, and cited cities such as Denver and Los Angeles where traffic congestion is cited as the No. 1 reason by many consumers for purchasing a scooter.
“In some areas it doesn’t matter what the price of gas is, you still buy a scooter to move from point A to point B with as much ease as possible,” he said. “So gas prices are important but we don’t think because they’re going down that the demand for scooters will disappear.”
Guarded optimism for ’09
Timoni says the company has plans to keep 2009 inventory at the same levels they were for this year, although Piaggio is prepared to scale down manufacturing significantly should the U.S. economy fall into a severe recession.
“Of course what’s going on with the economy right now, the uncertainty and risks have certainly increased, and many will view our plan to be an aggressive approach,” he said. “And we honestly don’t know what’s going to happen, so we’ll be watching carefully how things evolve this month and in December. We’re also confident that after the election is over that should have a positive impact on the economy and consumer demands. Certainly we need to be prepared to make adjustments to prepare for a dramatic change from what we’re expecting, and we are organized so we will be able to make those adjustments should the need arise.”
One marketing advantage Timoni says Piaggio plans to utilize is the low costs associated with buying a scooter, which he believes can appeal to those looking to cut costs during hard economic times.
“We have the ability to market the fact that scooters are still a great low-cost alternative to other means of transportation,” he said. “That might play in our favor during a negative economic environment. We are stepping into unknown territory and although we are optimistic 2009 will be favorable for us, at the same time you must be as cautious as possible because as we have all seen the global economy faces some huge challenges in the short term and things can change for the worse very quickly.”