Founded by Rinaldo Piaggio in 1884, Piaggio initially produced locomotives and railway carriages. During World War I the company focused on producing airplanes.

During World War II the company produced fighter planes, but Piaggio emerged from the conflict with its Pontedera plant completely demolished by bombing. Italy's crippled economy and the disastrous state of the roads did not assist in the re-development of the automobile markets. Enrico Piaggio, the son of Piaggio's founder Rinaldo Piaggio, decided to leave the aeronautical field in order to address Italy's urgent need for a modern and affordable mode of transportation. The idea was to design a cheap vehicle for the masses.

For the full story, see separate article on Vespa

Aeronautical engineer Corradino D'Ascanio, responsible for the design and construction of the first modern helicopter by Agusta, was given the job of designing a simple, robust and affordable vehicle by Enrico Piaggio. The vehicle had to be easy to drive for both men and women, be able to carry a passenger, and not get its driver's clothes dirty. Consequently, in 1946 Piaggio launched the Vespa (Italian for "wasp") scooter, and within 10 years over a million units had been produced.

Development

Piaggio had a strong cash flow emanating from the success of the Vespa, and decided to develop other products. In 1957 they produced the Vespa 400, a tiny passenger car.

In 1959, Piaggio came under the control of the Agnelli family, the owners of car maker Fiat SpA. Resultantly, as the wider ownership of Fiat in Italian industry, in the 1964 the two divisions (aeronautical and motorcycle) split to become two independent companies; the aeronautical division was named IAM Rinaldo Piaggio. Today the airplane-company Piaggio Aero is controlled by the family of Piero Ferrari, who also still holds 10% of the famous car maker Ferrari.

In 1969 the motorcycle company purchased Gilera.

Under New Ownership

In 1959, Piaggio came under the control of the Agnelli family, the owners of car maker Fiat SpA. Vespa thrived, until 1992 when Giovanni Alberto Agnelli became CEO - but Agnelli was already suffering from cancer, and died in 1997. In 1999, Morgan Grenfell Private Equity acquired Piaggio, but a quickly hoped for sale was dashed by a failed joint venture in China. In Italy, Piaggio invested 15 million euros ($19.4 million) in a new motorcycle but dropped it after building a prototype. By the end of 2002, the company had run up 577 million euros in debt on revenues of 945 million euros, and booked a loss of 129 million euros.