Piaggio India has production capacity of 150,000 scooters/year at its Baramati factory in Maharashtra. The company is selling 5,000 units of the Vespa LX 125 and VX 125 each month. This means that Piaggio is using just 40% of its production capacity at Baramati, not an ideal situation for the company. The Vespa’s high price is one reason for the poor sales. But a high price alone is not what is stopping Piaggio from selling more Vespa’s here.
The company made tall claims about the product and many of these claims aren’t backed up by actual performance in the real world. For example, Piaggio India claims that the Vespa LX 125 would go 60 kilometers to every liter of petrol. In the real world, Vespa LX 125 owners are complaining that the scooter manages just 40 Kmpl in everyday riding conditions. And India is a very mileage conscious country with mileage being a major decision factor before buying.
Also, the amount of features offered for the price charged leaves one shortchanged. Since the high initial price ensured that not many people bought the Vespa LX 125, the company dropped prices by more than Rs. 6,000. While dropping prices, the company said that a higher localization of the product had led to the prices being reduced. The price drop increased sales to a certain extent.
When compared with competition, the Vespa LX125 continued to be priced higher for the features it offered since the scooter didn’t even feature tubeless tyres. Since many owners complained about weak brakes on the Vespa LX 125 and the lack of tubeless tyres, the company introduced the Vespa VX 125 model equipped with a front disc brake and tubeless tyres.
While sales increased marginally due to the introduction of the Vespa VX 125 model, Piaggio has quietly increased prices of the LX 125 yet again. Now, the Vespa LX 125 is priced at Rs. 68,333 in Mumbai, which is actually Rs. 2,000 more than what it was launched for initially. Now, what does Piaggio have to say for the nearly Rs. 8,000 increase after the price drop?