Piaggio Group SWOT & PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Huge market potential in developing economies: Trend of globalization and industrialization has impacted economies in the world. Emerging economies are now these days the most attractive market with huge potential for market growth. Mobility behavior has changed, supported by world class infrastructure growth. People are using vehicle not only for commercial or commute purpose but also for adventure. Earlier people used to have one vehicle per family, but this trend has changed dramatically. Not only there is an increase in licensed male drivers but also female drivers. Due to huge industrialization and investment emerging economies are spending more on developing road infrastructure. This is very crucial in changing consumption pattern for automotive industry. Due to increase in global pollution with increasing number of fuelled vehicles developed and developing economies are focusing more on greener substitute. The automotive industry mechanical to its core have to compete in digital world which demands a shift in expertise and eventually creates niche markets for business. Piaggio having a specialized world class R&D team has huge potential to grow if it can tap on these areas as mentioned tapping an altogether different economy for automobile industry.

2. Diversifying their product portfolio to accessories and merchandising: The global automotive accessories market is mostly led by the accentuating inclination towards vehicle customization. Piaggio can tap market of vehicle accessories by diversifying their product portfolio. Piaggio group has huge potential in accessories market as being a world class player by implementing new technologies like biometric access, lightening technology, and active window displays. The objective in achieving success in accessories market is based on consumer behavior with specific reference to their interest in accessories. Piaggio group can devise an effective routes-to-market methodology to evaluate current market trends and drive profitability. They can also focus on accessories supplier and develop professional relationship with them to harness this market potential. These days’ youth love to associate themselves with brands in any different ways like merchandise. Huge potential lies in tapping the merchandise market increasing brand ambassadors and even increasing their customer interaction on a global platform.

3. Growing Demand for Two-Wheeler: Global market for two-wheeler stands at around dollar $ 95 billion in 2016 and is projected to grow by US dollar 125 billion by 2024. The increase in demand for two-wheeler is backed by their high fuel efficiency, growing urban traffic, affordability, lower emission and easy maneuverability. Two-wheeler especially bikes are these considered as aspirational objects and are being sold at premium price much higher than few luxury cars. Indian market has report 41% increase in sales volume, where in total Asia pacific being 18% increase in volume.

Threat

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Political

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Economic

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Social

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Technological

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Legal

1. Profitability directly linked with law on automotive industry: Law is also a crucial factor that impacts the profitability and performance of the vehicle brand. Vehicles in international markets are subjected to laws relating to product quality and safety. The exported vehicles have to pass emission controls. The automotive industry continues to experience dramatic changes including legal and regulatory developments throughput 2017. As per report published by Foley’s Automotive industry Team the litigation, enforcement and landscape are likely to look like in 2018 and beyond. The issues are ranges from top management to production process. Some of the legal issues faced includes employment laws, potential pitfalls in the automotive industry in an era of increasing warranty and recall costs and continued consolidation in the supply base. Legal hurdles will also be present in navigating the new world of connected vehicles while developing, implementing and maintaining an effective auto cyber security program.

2. Stricter norms impacting manufacturing process: The international automotive industry is a multi-billion industry with several global brands competing for same market pie. Since its inception in 19th century this industry is also in pace with industrialization phase. Now trying to pace up with Industry 4.0. Laws and regulation have always impacted automobile industry. Hybrid vehicles have a great demand and find huge support from government. All vehicles have to stick to emission guidelines as prescribed in the particular country. For example, UK government favors vehicles with lower CO2 emission. Higher tax rate is levied on vehicle with higher emission rate which in turn will rise the price consumer have to bear. The markets like UK and EU are providing government subsidy for the low emission vehicle. Governments across economies are imposing regulations regarding the external and internal modification of automobiles. Another area of concern for Piaggio was the proposed amendment to Regulation (EU) No 168/2013 on the transition to the Euro 5 step for the entire L category vehicles. The regulatory body has had to work with the European Association of Motorcycle Manufacturers for the adoption of some critical requirements for the transition to Euro 5 for some subcategories of vehicles (categories L1e; L2e; L6e, Trial and Enduro bikes) which will give some breather to companies such as Piaggio.

Environmental

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