Two-wheeler

2-Wheeler revenues

The Two-wheeler business mainly comprises two product segments: scooters and motorcycles, in addition to the related spare parts and accessories business, the sale of engines to third parties, involvement in main two-wheeler sports championships and technical service.

The world two-wheeler market comprises two macroareas, which clearly differ in terms of characteristics and scale of demand: economically advanced countries (Europe, United States, Japan) and emerging nations (Pacific Asia, China, India, Latin America).
In the first macroarea, which is a minority segment in terms of volumes, the Piaggio Group has a historical presence, with scooters meeting the need for mobility in urban areas and motorcycles for recreational purposes.
In the second macroarea, which in terms of sales, accounts for most of the world market and is the Group’s target for expanding operations, two-wheelers are the primary mode of transport.

Reference market and positioning

In 2010, volumes on the world two-wheeler market (scooters and motorcycles) were just under 47 million units.
The People’s Republic of China remains the leading market with 16 million units sold, followed by the Indian market, which exceeded the 10 million mark for the first time ever (11.3 million units sold).
Asian countries made a significant contribution to the world market in terms of units sold. The most important included the Indonesian market with total volumes of more than 7.6 million items, and leader in South East Asia, followed by Vietnam, recording a steady growth and 2.7 million units sold, and Thailand with more than 1.8 million units sold.
In these areas (China, India, rest of Asia) the market is generally characterised by low-cost, small engine, compact vehicles, designed for primary mobility requirements, while the premium market is slowly yet steadily gaining ground.

The negative trend on developed markets (Europe and America first and foremost) of 2009 continued in 2010.
Europe accounted for 1.6 million units sold in 2010, with a 13% decrease in sales on the two-wheeler market compared to 2009 (-12% in the motorcycle segment and -13% in the scooter segment). In the Americas, the decline in North America continued, with under 500,000 units sold, while the South American market picked up after a negative year in 2009, driven by the area’s main market, Brazil, which sold 1.8 million vehicles in 2010.

In this international scenario, the Piaggio Group retained its leadership position on the European market in 2010, with a market share of approximately 20%, which is the same as 2009, thanks also to its continued leadership in the scooter segment, and increased share of the motorcycle segment.
With production at its own site in Vinh Phuc, the Group also consolidated its position on the premium market in Vietnam with successful sales of its Vespa model, and laid the foundations for future growth in other Asian area countries by forging business relations with local importers.
The Group held on to its strong position on the North American scooter market, where it has consolidated its leadership with a market share of just under 30%, and where it is committed to increasing its profile in the motorcycle segment, through the Aprilia and Moto Guzzi brands.

Brands and products

The Piaggio Group operates on the two-wheeler market with a portfolio of 7 brands that have enabled it to establish and consolidate a leadership position in Europe: Piaggio, Vespa, Gilera, Aprilia, Scarabeo, Moto Guzzi and Derbi.
The brands offer a complementary product range, so that the Group can supply the market with a fully comprehensive range to target the needs of different customer groups.

Engines for Piaggio, Vespa, Gilera, Derbi, Scarabeo and Moto Guzzi brands are designed and manufactured by the company. For Aprilia, the Group manufacture engines for the scooter segment, the 450cc and 550cc engines for off road models, the V-twin 750cc and the V-four 1,000cc.

Piaggio. With a wide range of models covering all main scooter segments, Piaggio is one of Europe’s and the world’s leading brands. Piaggio stands for innovative products that are safe for the rider and particularly kind to the environment. The huge success of Piaggio has been built up around the ease of use, design and outstanding functionality of its products.
In 2010, the new Beverly was added to the Piaggio range, with its Italian restyling, as well as the new Typhoon, with its new design and 4 stroke 125cc engine 4T, to sell alongside the traditional 2 stroke 50cc model.
In the last year, the Liberty and Zip proved to be best sellers, with nearly 37,000 and approximately 33,000 units sold. The Beverly also performed well, with nearly 27,000 units sold, and the MP3 range, with 20,000 units sold.

Vespa. The Vespa is the Piaggio Group’s most well-known brand worldwide and has delighted growing numbers of customers since 1946. The Vespa brand is synonymous with Italian style and flair, and is often used in advertising, films and other media. The Vespa range has always featured models that have all the distinctive heritage of the brand combined with a unique design and steel body.
In 2010 four new special series of the Vespa were unveiled: the Vespa LX Touring, Vespa S College, GTS Super Sport and GTV Via Montenapoleone. In addition to this, with more than 90,000 units sold and an excellent performance in South East Asia, the Vespa LX was the Group’s best-selling model worldwide in 2010.

Gilera. The Gilera brand features models in both the scooter and motorcycle segments. The brand came into being in 1909 and was acquired by the Piaggio Group in 1969. Gilera is known for its successes in racing, winning six world championship manufacturer’s titles and eight world championship rider’s titles.
Gilera is a brand designed for a young, vibrant market and dynamic motorcyclists.

Derbi. The Derbi brand features a range of scooters from 50cc to 300cc and a range of motorcycles from 50cc to 125cc. Its customer target is young, in the 14 - 17 years age group, making it one of the biggest manufacturers in the 50cc segment. The brand has won 21 world titles, gaining a leadership position in Spain and on the 50cc and 125cc motorcycle market.
In 2010, the Sonar was unveiled - a sporting high-wheeled scooter, designed for urban mobility.

Aprilia. The Aprilia brand includes a range of scooters from 50cc to 300cc and a range of motorcycles from 50cc to 1000cc. The brand is synonymous worldwide with a sporting style thanks to its huge number of wins in leading championships, the outstanding performance of its products, their innovation and cutting-edge design.
2010 was an important year for Aprilia. As a final celebration of Max Biaggi’s superb season on the RSV4 of the Alitalia team in the World Superbike Championships (manufacturer’s and rider’s titles), the new RSV4 Factory APRC Special Edition was unveiled, featuring an innovative electronic vehicle performance handling system APRC (Aprilia Performance Ride Control), which immediately became a benchmark for the large engine superbike sector. Other new features in the motorcycle range included the restyled Shiver 750 with better ergonomics, handling and design, and the 750cc Factory version and introduction of the 1,200cc model of the Dorsoduro.
In the scooter range, the Atlantic and Sportcity One were both restyled.

Scarabeo. The Scarabeo brand offers a wide range of scooters from 50cc to 500cc, and is the Group’s premium brand, along with the Vespa. The Scarabeo brand was launched by Aprilia in 1993, and is the first brand to have introduced high-wheeled scooters in Europe.
In 2010 smaller engine models in the range (50cc and 100cc) were restyled, and the special Scarabeo “NET” series was introduced.

Moto Guzzi. The Moto Guzzi brand came into being in 1921, and is one of the most well-known motorcycle brands in Europe, with a strong brand loyalty among customers. In 1970 Moto Guzzi gained worldwide popularity when it became the motorcycle of choice of the police in Los Angeles, California. Moto Guzzis, which have always been unique with their distinctive 90° V twin cylinder engines, are perfect for touring and combine a stylish traditional design with the latest technologies in the world of motorcycles.
With the start-up of an industrial plan to renovate the historical production site at Mandello del Lario, 2010 was a fundamental year for relaunching the Moto Guzzi brand. New products introduced during the year included the Nevada Anniversario (to celebrate twenty years of the model) the new Norge GT8V, with a latest generation 1,200cc 8V engine and the new V7 Racer.

The distribution network

EMEA
In the EMEA area (Europe, the Middle East, Africa) the Piaggio Group operates directly in main European countries and through importers in other markets.
At the end of December 2010, the Piaggio Group had 3,600 dealers (direct dealers and importers) in EMEA (of which 60% in Europe) for a total of 17,900 sales outlets.
40% of these operators represented and distributed the Group brand (or several Group brands) on an exclusive basis.
Of the 17,900 sales outlets, 4,800 are in Italy, 10,500 in the rest of Europe and 2,600 in markets overseen by importers.
The process to streamline and consolidate the Group’s sales network continued in 2010, with two strategic areas of focus:

1. levering and capitalising on Group synergies (based on a distribution model which is geared more towards the end customer and divided into two macroareas: urban mobility, mainly focussed on the light urban scooter and motorcycle segment, and sport & passion, targeting motorcycles and a sporting style in general).
2. consolidating the performance and quality of the distribution network through the following priority actions: improving coverage, the sales and financial performance of dealers, developing management services and tools.

Americas
In the Americas, the Piaggio Group was served by 390 active operators at the end of 2010, broken down as follows:

• 330 active dealers on the US market, with a direct commercial presence;
• 40 dealers on the Canadian market, with a direct commercial presence;
• in Latin America (LATAM) the Group is present in 22 countries with a network of 25 importers.

Following the significant market downturn in the United States (-40.8% in 2009 and -15.8% in 2010), the Group pursued an objective of consolidating and supporting the distribution network, and of streamlining internal structures to better reflect new market conditions.

In Canada, the Group’s presence on the market was handled by an importer up until 2009.

The Group changed its distribution strategy from January 2010 onwards, adopting the model used in the US and developing its own sales network in order to capitalise on the synergies it has from its presence in the US.
Overall sales to end customers in Canada amounted to 1,900 units in 2010.

In Latin America, the Group is present in 22 countries with a network of 25 importers, to whom approximately 1,900 units were sold.

Pacific Asia
In the Pacific Asia Area, the Piaggio Group has a direct commercial presence in Vietnam and for the Aprilia brand in Japan. On other markets in this area, it operates through importers.
In line with the Group’s strategic objectives, which plan to expand operations in the region, the distribution network is being built up.

In Vietnam, the Group increased its importers from 4 in 2008 (when a different business model was adopted) to more than 40 dealers in 2010, and more than 80 sales outlets. The Group has aimed and is aiming to develop its network in quantitative terms, by stepping up its presence in smaller areas of the country, and in qualitative terms, with a particular focus on corporate identity.

In Japan, the Group directly manages the Aprilia network and operates through importers and dealers for other brands. In total, the distribution network in the country has 140 sales outlets.

The Group is also present in Indonesia, Taiwan, Malaysia, Thailand, Korea, Hong Kong, Singapore, the Philippines, China, Australia and New Zealand through importers.

Comment on main results and significant events of the sector

During 2010, the Piaggio Group sold a total of 395,000 units in the two-wheeler segment, worldwide, accounting for a net turnover equal to approximately 988.1 million euro (-7.3%), including spare parts and accessories (138.4 million euro, -4.5%). In 2010, the Piaggio Group reconfirmed its leadership position on the European scooter market.

As discussed in previous sections of this report, the trend of Piaggio Group operations in 2010 was strongly penalised by a falling demand on the Italian, European and North American markets. This downturn concerned both the scooter and motorcycle segments.
On the other hand, growth in the Asian area was strong compared to the previous year, with sales and turnover increasing by 60.5% and 58.1% respectively, mainly due to the success of the new production site in Vietnam.

The MP3 range and its various models (125cc, 250cc, 300cc, 400cc and 500cc) continued to be a success story in 2010 (guaranteeing the Piaggio Group an overall turnover of approximately 95 million euro, with 20,000 units sold. Likewise, the Vespa - the Piaggio Group’s iconic brand in the two-wheeler sector, performed extremely well on the world market, with a turnover equal to 275 million euro, with approximately 132,000 units sold.

Turnover from the motorcycle segment was given a strong boost by the Aprilia RSV4 and thanks to the excellent results achieved in the Superbike World Championships, its different versions produced a very satisfactory turnover for the Group.

Investments

As referred to previously, investments in the Two-wheeler segment amounted to approximately 67.7 million euro during 2010. These investments mainly targeted the following areas:

• Development of new products and face lifts of existing products
• Improvements in and modernisation of current production capacity
• Implementation of new IT tools

As regards investments for Piaggio Group products in particular, significant resources were dedicated to some brands and/or products which are key to the Group’s development. Main investments for European and Asian production sites (Vietnam and India), addressed the following areas:

• Development of the new 350 cc engine
• Development and launch of the new Beverly 350 cc
• Completion of the MP3 range
• Completion/renewal of the Vespa range in Europe (LX; PX)
• Initial developments to manufacture the Vespa brand in Vietnam
• Restyling of the Scarabeo range
• Restyling of the Aprilia sports motorcycle range (Tuono, RS)
• Completion of the Dorsoduro 1,200 cc
• Initial development to restyle the Moto Guzzi range (Nuova California)

Industrial investments were also made, targeting safety, quality and the productivity of production processes. As regards common investments covering the entire Group, a new release of SAP was implemented during 2010.