Piaggio Sales Spike On Gas Price News, Traffic Jams

Vespa Piaggio USA, which markets both Piaggio and Vespa brands in the U.S., has had a banner year for both brands, whose products range from 50-cc scooters to Piaggio's highly unusual MP3--a scooter with two front wheels with a steering and suspension system that lets the wheels lean together on turns while remaining independent over bumps.

But the company's president and CEO, Paolo Timoni, says it's not all about gasoline.

Timoni says in the first seven months of the year, sales are up around 93% versus last year, with a big acceleration during the summer. "We saw sales increase 100% in May, 147% in June and 169% in July [versus those months in 2007]." He says August will slow a bit because of tight supply, to 80%-90% above last year. Scooters from Piaggio and its upmarket sibling, Vespa, range from around $2,000 to $9,000.

Timoni says that three things drive sales to record numbers: gasoline prices, traffic congestion and a resurgence of environmentalism. He says that regardless of where gasoline prices go, traffic congestion remains severe, and concern for the environment is growing.



"We interview customers after a few months of using scooters and find that the great majority are happy not only because of the money they are saving on gas, but because of the sense of liberation they get, and the convenience: They don't have to think about parking, and about congestion," says Timoni.

"It's permanent trend," he opines. "There are 30 million scooters on the road in Europe and only a million in the U.S., but the same drivers that created the [pro-scooter] behavior in Europe are becoming a reality here: People spend 3.7 billion hours in traffic; gas prices will never go back to $2.50 a gallon; and the population density in metropolitan areas will get higher and higher."

He says that while Piaggio leads in U.S. scooter market from a dollar perspective, the Japanese makes lead in volume. "In dollars, in the first seven months, we are No. 1, but our Japanese competitors tend to sell more because they sell more of the 50-cc scooters. Also, we are very new to the market, and our dealer network is 300 dealers. Honda, for instance, has a dealer network of 11,000 to 12,000," he says.

Timoni says Piaggio USA's best-selling model is the Vespa LX 150, a mid-range scooter for city riding, with an average price of around $4,300. The company has sold more than 2,300 MP3 trikes since the launch last fall. Timoni says it appeals to a somewhat older segment of the market.

"Contrary to Europe, where many people learn to ride when they're young, most Americans are not familiar with motor scooters." He says the MP3, which ranges from $7,199 to $8,899, appeals to consumers 40 and older.

The company is running a number of summer promotional programs, such as offering gas cards with purchase of a scooter and a cross-promo with Logitech computers for college-bound students. But Timoni says that Piaggio--which doesn't do any TV ads, although it posts videos about products like MP3 on YouTube--has gotten the most mileage from PR around scooters as an alternative to cars.

"Clearly, what has given us a lot of visibility has been the exposure we have had on TV and in newspapers, with gas prices increasing and people looking for alternatives."

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