Piaggio's iconic Vespa returns to India

Italy's iconic Vespa scooter, a rage with the Indian middle-class in its heyday, re-entered the country on Thursday after a 13-year hiatus as scooters come back in vogue.

Auto-making giant Piaggio has brought to India the LX125, a high-tech, gearless scooter, to take on competition from rivals such as Honda, TVS, Suzuki and Yamaha in the fast-growing market.

"Piaggio begins a new chapter in India with the Vespa LX125. There is no better time to be in the Indian two-wheeler scooter space," Piaggio Vehicles (India) chairman Ravi Chopra told the launch in financial capital Mumbai.

Piaggio has invested 30 million euros ($30 million) on its factory -- with a capacity to roll out 150,000 scooters per year -- located at Baramati in the western state of Maharashtra, of which Mumbai is the capital.

The firm plans to invest a further 20 million euros to double its scooter production capacity by mid-2013, Chopra told reporters.

The Vespa -- which means "wasp" in Italian -- returns to India at a time when sales of scooters are on the rise, as Indian families, particularly women, are looking for trendy, affordable and easy-to-ride two-wheelers.

Indians purchased 2.56 million scooters in the fiscal year ended March, marking 24.6 percent year-on-year growth, according to industry data.

Sales have grown at an average annual 22.2 percent over the last five years, against just 9.0 percent for motorcycles, analysts said.

The LX125, showcased at the Auto Expo show in New Delhi in January, is priced higher than competing models, selling at 66,661 rupees ($1,281) at showrooms in Maharashtra.

Most 125cc-engine scooters in India are priced between 40,000 to 45,000 rupees ($769 to $865), analysts said.

Mahantesh Sabarad of Fortune Equity Brokers says the Indian market could be "challenging" for Piaggio.

"At this price, volumes could be low," he told AFP.

"A lot will depend on after sales network and the quality of product."

Chopra was confident that high prices would not deter buyers.

"We bring the premium retro-classic look, where pride of ownership is key," he said.

Piaggio exited the country in 1999, ending a 16-year-long partnership with India's LML Motors after a long dispute.

India is also a fast-growing market for cars, attracting global automakers from General Motors to Toyota, as ownership is still low in contrast to saturated developed countries.