In a short span of time, Diego Graffi, CEO & MD, Piaggio Vehicles, has worked out the math to stay ahead of the times in terms of technology and innovation.
by Jayashree Kini Mendes
DIEGO GRAFFI, CEO & MD, PIAGGIO VEHICLES, is a much travelled man. He should be, after nearly a decade with the group. But paradoxically, he will not take the driver’s seat. That is because, according to him, PVPL is driven by the customer.
In true Italian tradition, Graffi believes that PVPL is family. That is how it started. Rinaldo Piaggio founded the company in 1884 and a few decades later hit off with a two-wheeler called Vespa. This wonder vehicle continues to rule the roads in Italy and other parts of the world. Parents rode, Children wanted the pillion. It became a family affair. Italians even coined a word, ‘vespare,’ meaning going out on a Vespa. Evidently, this is the approach that has sustained Piaggio.
As far as the CV segment is concerned, Piaggio is globally known for owning and establishing the renowned brand Apé in three-wheelers as well as Porter and Quargo in the four-wheeler small CVs. It has a wide range of products under two main brands Apé and Porter and eight sub-brands with various products for varied applications.
In India, the company rolled out its 2.5 millionth small commercial vehicle in August. Graffi has now set his sights on targeting the next milestone of three million customers by 2020.
There are aggressive plans now to invest over Rs 200 crore to develop new vehicles and engine technology. This along with aggressive network expansion will fuel PVPL’s growth in India. Diesel vehicles comprise about 85% of the overall production and sales of the Piaggio CV brands in the country. “Going forward we expect this percentage to change and alternate fuel vehicles will see increased presence in PVPL’s portfolio.” Graffi points out.
In a sense, Graffi is a chip of the old block. As he says, “When we present a product, it’s not just the commercial angle we are thinking of. We think of creating livelihoods for our customers. Therefore mileage, durability and reliability of the vehicle are most important. It is because of this that we are the market leaders in the three-wheeler cargo market with a share of around 47%.”
About the three- and four-wheelers, that are now extremely popular, Graffi thinks as much about the customer’s earnings, comfort and profitability as much as about the company’s margins. For the man who has been Piaggio’s procurement head earlier, this is nothing short of a social revolution. The automotive veteran is also hands on in technical direction, manufacturing, engineering, and R&D.
How did Piaggio evolve? The 47-year-old intrepid talisman believes in his people, and in his own company’s guidelines. He worked tirelessly in India to consolidate the market and take it to the position it holds. And for this, Graffi travelled back and forth to India and abroad to get his projects in sync with global thinking. He met the heads and workers in other parts of the globe and came to the conclusion that he was on the right track making decisions on Piaggio’s fortunes in India.
It was in 2012 that the company brought in its two-wheelers to India. The time was ripe as Piaggio worldwide is known as a two-wheeler company. In India, it has the Vespa and the Aprilia (the latter was introduced two years ago). In September, it launched the facelifted Aprilia SR 150, Aprilia SR 150 Race, limited edition Carbon SR 150, Vespa, along with introducing mobile connectivity technology for the new range. The company became the second OEM in the country to introduce the connectivity feature in its scooter range. This is in line with its strategy for the domestic market to reinvent mobility, which will enable its Vespa and Aprilia customers to control features on their two-wheelers. The user-friendly solution can be accessed via a mobile and will add to the convenience of the customers with features that include – GPS information, emergency contact detail and the ability to locate nearby service centres.
Various countries in the Middle East, Nepal, India, Sri Lanka, Bangladesh, East Africa and West Africa were in need of different solutions, and Piaggio had to meet their needs in matters of logistics, engines, loadability, mileage, etc. Says Graffi, “We had a lot of work to do in terms of strategy, manufacturing, and maintenance of both machinery and relationships.” He notes that one of the most important factors in discerning the market requirements is a combination of legacy and study of the markets trends. This is because although the business is commerce, customers do come in different shapes and sizes.
Following the market trends is also part of innovation. It helps not only in finding out ways and means to stay ahead of the pack, but in adopting new technologies that facilitate payload, work force transportation, ownership and at the same time maintaining machinery and relationships.
He adds, “Recently, PVPL launched the water-cooled engine variants of Piaggio Apé. Apé Xtra LDX and Apé Auto DX are part of the new water-cooled range. These variants are the first-of-its-kind in the industry and these three-wheelers offer best-in-class performance in terms of power, pick-up, mileage and maintenance. Water-cooled engines have been there in the passenger car segment for quite some time as they offer many benefits. The water-cooled engine is efficient in removing excess heat and improves engine performance. With the introduction of this technology in the small commercial vehicle space, we aim to provide the benefits of this technology to our customers.”
In CVs, the company manufactures seven models. It also has an engine manufacturing plant within the same premises, which is likely to see capacity expansion in the near future. At present, it manufactures LPG, CNG and petrol engines. It also produces a twin-cylinder diesel engine for the Porter 1000 four-wheeled small CV. Graffi says the company is working closely with Greaves Cotton, from which it sources diesel engines, for providing better payloads, fuel efficiency, and overall performance to owners.
Interestingly, its powertrain plant, which has an installed capacity to produce 150,000 units annually, is at present operating at 100% capacity utilisation.
Piaggio Vehicles follows a unique method of manufacturing. For one, it maintains a flexible manufacturing system. That makes the task even more complex because this means the kitting on the assembly line has to be 100% accurate. The shop floor people get it right all the time.
In terms of the CV plant at Baramati, it has a capacity of 350,000 per annum and dedicated lines for three- and four-wheelers. Significantly, it has close to 90% capacity utilisation. Following a just-in-time process, it sources the rear body from suppliers, while conducting the pressing operations in Pune and other areas around it. With 100% localisation, and plenty of automation at the plant, the plant works in two shifts. The manufacturing unit involves two processes i.e. welding and painting. The welding process takes place under which steel is welded to form a structure that is required, following which the parts are transferred to the painting unit. Painting of the parts is divided into two segments. One where the steel structure is painted and the other where the plastic structure is painted. After completion of this process, the parts are kept into a blue box to be transferred into the automation unit. The automation unit includes assembly of all parts that are pointed to form a finished product. The assembly process is undertaken in a very systematic manner.
For two-wheelers, in India, a total of two brands are manufactured at Baramati — Vespa & Aprilia. There are other models produced including Typhoon and SR-128 which are exported to other countries.
How has Graffi steered PVPL through the innovations and solutions that the company is known for? “Innovation is part of the Piaggio DNA,” Graffi declares. “For example we were the innovators of the three-wheelers. We introduced diesel in India in the three-wheeler segment, and our teams are still working on more advanced solutions for the customer. We were also the first to go electric in Europe in two-wheelers. So you see we keep innovating all the time.”
There is a sense of confidence about him when he says that PVPL will further strengthen the presence in last mile transportation in the 1.5-tonne payload category and last-mile transportation passenger category in both 3-wheelers & 4-wheelers. The recently launched CNG/LPG variants of the three-wheelers have more power and torque as compared to the other models. “We are looking at solutions in all power sources, including diesel, petrol, CNG, LPG and electric in the future. PVPL is further working on upgrading and developing various powertrains. We are also gearing up for introducing the BS VI compliant range of vehicles before the deadline of April 2020,” he adds.
As to customer confidence, Graffi believes that it is not just dealer networks and sales but human resources that matter. “We extend innovation to the customers too, in the sense that innovative support reaches them too, he reveals. “We also encourage local talent within the company.”
Local talent, that is the work force, within the establishment, plays a major role in the fortunes of the company. Along with forging customer relationships, Piaggio also builds loyalty, integration, trust and dedication among the workers who are all looked upon as auto-makers. Naturally then, Piaggio has been encouraging internal promotions.
In the meantime, the company is clear on its belief that it is a storehouse of wealth. It has the manpower and also the man-hours. For Piaggio, energy flows from within. Graffi cites three reasons on which internal trust and the pursuit of development is based. One is internal mileage. Second is internal power and performance, and the third is internal thought.
Talking about two-wheelers, Italy has been running an electric two-wheeler. The ‘Electrica’ has not yet reached India. Any reason?
Graffi says, “This is a question we face often.”
Graffi says that with Piaggio’s background it is not difficult to introduce an electric scooter. “But what purpose will it serve? It will be a show of innovation, but will it help the customer? And what about mobility and infrastructure for charging? We have to wait for the right time. The customer has to perceive the value of the service he is receiving. I don’t think India is ready for it as yet. The product and technology is available already and Piaggio is proud of it but there are two things to do in parallel to make the business model viable: Infrastructure for charging and cost of batteries,”
Innovation starts with not only OEMs but also suppliers. How does Piaggio upscale or hand-hold the suppliers in raising the technology levels?
“Innovation as I said mostly comes from within, but we do have contacts with established groups for components. Definitely we are in touch with them for certain technological requirements,” he says.
PIAGGIO and R&D
A product-development cycle takes a minimum of four years. How can this be reduced to bring products into the process? “One way is to go in for a cross-functional manner,” says Graffi. “We have been developing products much faster anyway. For solutions we have prepared officials to work systemically to save cost and time. This was not the case some 20 years ago when there was a physical object in front of you to verify the product. Now that process has been reversed and the components digitalised.” A product has been conceptualised before it is placed in front of the customer.
“In the case of BS VI, we have to renew, and comply with the new regulations that are coming in 2020. We will focus totally on the electronic fuel injector. But most of our concentration will be on our power-trains,” he adds.
Graffi believes that India is today the main R&D centre for commercial vehicles. It is also the main market for CVs. It is a global demand to have an Indian technician and Piaggio India is proud to work closely with the Italian arm.
Are you hand-holding start-ups in terms of developing new products and solutions? Piaggio has been dialoguing with two or three new companies for innovations and solutions across geographical boundaries in order to standardise products and solutions as per the needs in Vietnam, India, Nepal, Sri Lanka, Bangladesh, Africa and Europe.
Graffi is taking no chances. He ensures that he continues his tryst with R&D so that he can reach the market faster than his bikes.