Arturo Zapata
President
Corporación Zapata
/
Insight

Complementing Mobility Solutions Under One Roof

Fri, 09/01/2017 - 13:49

Necessity is the mother of invention and Corporación Zapata knows it well. Since the crisis of 1994, the company has looked for new ways to address its customers’ needs, creating new branches and spin-off companies such as Ariza, Autocosmos, Kromtek and V4B. Zapata’s vision was to develop integrated solutions for mobility challenges but the holding had focused only on vehicles as its main product in one way or another. Finally, in 2016 the company took a leap of faith and partnered with Piaggio in a new mobility alternative that until now had not been made available in the Mexican market.

“Motorcycles could be an efficient solution to the lack of mobility options but not in the way they are used right now,” says Arturo Zapata, President of Corporación Zapata. “They are currently seen as a basic transportation method used by someone who cannot afford anything else.” Zapata says that the market for motorcycles in the country mostly targets delivery services, motocross aficionados and an ultrapremium segment that uses them purely for leisure activities. INEGI estimates motorcycles and scooters in Mexico City barely surpass 200,000 units, while almost 5 million vehicles make their way through the overly congested streets.

Mobility advantages were one of the reasons Corporación Zapata pushed to enter this market. The company’s president says that even though trends show people living closer to their work place, their commute may not be improving. The UN’s Urban Mobility Report sheds a light on one of the main reasons for this problem, showing an average of 1.2 passengers per vehicle in Mexico. “In Mexico City alone there are more than 20 million people, which means that our mobility issues will not be solved by adding more roads,” says Zapata. Finding a parking spot is yet another crusade. “Especially around schools and universities, streets are packed with people who cannot find a place to park,” Zapata says. Diego Solórzano, Director General of Carrot, explains in Mexico Automotive Review 2015 that cars are underutilized assets that spend 90 percent of their useful life parked.

The environmental factor was another trigger for Corporación Zapata. “Moving around in a car one hundred percent of the time is simply not sustainable,” says Zapata. “We are convinced that moving forward, all those who drive a car will have to adopt a complementary solution. Cars will be used only for highway driving, long rides across the city or when driving with other people.” Motorcycles, on the other hand will be better suited for inner-city driving thanks to their advantage in terms of space, allowing drivers to maneuver more freely, negotiate traffic and reduce commute times.

Now that Corporación Zapata has found its ideal partner in Piaggio, the company is working on its brand development strategy and the establishment of a strong dealer network. The holding opened a model dealership in Mexico City in late 2016 and has since received letters of intent from various investors wanting to open more dealerships in Mexico City and in several cities throughout the country. Three new stores are already open to the public in Mexico City and Metepec, State of Mexico. Zapata now faces the challenge of transforming the traditional business model of motorcycle purchases. “Until now, buying a motorcycle in Mexico was like buying a blender,” explains Zapata. “There is little emotional connection attached to the purchase.”

Along with its new dealership approach, Corporación Zapata has set up competitive automotive financing for motorcycles and adequate aftersales service. Zapata believes that service and financing, or their lack thereof, are truly a nightmare for motorcycle buyers. Financing rates for motorcycles are between 25 and 40 percent with only one- to two-year terms. In partnership with Scotiabank, Corporación Zapata has branded its solution as Piaggio Financial, powered by Scotiabank. “The bank had never formally financed motorcycles but is convinced that there is a solid and attractive business opportunity in Vespa scooters among Mexico’s middle class and particularly the highly educated and ecologically minded young executive market,” Zapata says.

Corporación Zapata made the decision to focus on mobility, evolving from being a traditional car dealership and joining the list of companies that are transforming their business model. If its strategy succeeds, it will uncover a previously untapped market. “We do not want a slice of the pie that already exists. We are creating a new market,” says Zapata.