Although Piaggio's sale in Vietnam decreased sharply compared to previous years, its profit still reached $17-21 million per year in the last three years.
Considered as "a country of motorcycles", Vietnam now has more than 50 million motorcycles. With a population of nearly 100 million people, every two people own a motorcycle on average.
According to Vietnam Association of Motorcycle Manufacturers (VAMM), there were more than 3.2 million motorcycles sold in 2017, marking an increase of 4.8 per cent year over year. The Vietnam motorcycle market has not shown signs of saturation when sales volume is still growing over the years at low rate.
Thanks to the trend of moving from manual transmission gear-box motorcycles to motor scooters in recent years, motorbike companies continue to get profit.
The most popular motorcycle brand in Vietnam Honda is the dominant manufacturer with over 70 per cent market share. Last year, the company sold 2.33 million motorcycles and earned approximately $643 million.
Although Piaggio made investment in Vietnam later, the Italian manufacturer of luxury motorbikes quickly achieved much success. Establishing a factory in Vinh Phuc province since late 2007, Italian brand has made Vietnam one of its three manufacturing centers in the world.
Offering Vespa LX and then Liberty for high-end motor scooters segment, Piaggio achieved sales of about 70,000 vehicles per year in just a few years. Although it is expected to be the leading brand in this segment, sales of Piaggio have fallen to over 40,000 units a year in recent years.
The new brand Medley, a competitor to Honda's SH, has not been as successful as LX and Liberty when its sale was low and there were some problems.
Although failing to compete with Honda, Piaggio did not suffer loss in Vietnam market. Its business report shows that Piaggio earns hundreds of billions of dongs per year from selling motor scooters to Vietnamese people.
In 2017, Piaggio's revenue and profit in Vietnam reached $237 million and $17.8 million respectively, which is the same as the previous year. Compared to 2015, the company's revenue grew slightly but the profits dropped by nearly 30 per cent.
Piaggio's profit declined when it suffered severe competition from other brands such as Honda, SYM, Suzuki or Yamaha. Its gross margin has fallen from 32 per cent in 2015 to 26 per cent in 2017.
In fact, some Piaggio's products had lower price over years, which eroded the company's profit margin. This also shows that in the eyes of Vietnam consumers, the LX or Liberty is no longer so special that they are willing to spend more money to buy as before.
