Founded by Rinaldo Piaggio in 1884, Piaggio initially produced locomotives and railway carriages. During World War 1 the company focused on producing aircraft. During World War 2 the company produced bomber aircraft, but Piaggio emerged from the conflict with its Pontedera plant completely demolished by Allied bombing. Italy's crippled economy and the disastrous state of the roads did not assist in the redevelopment of the automobile
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 an inexpensive vehicle for the masses. Aeronautical engineer Corradino D'Ascanio, responsible for the design and construction of the first modern helicopter by Agusta, was asked by Enrico Piaggio to create a simple, robust and affordable vehicle. 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.
In 1946 Piaggio launched the legendary Vespa scooter (Italian for "wasp") and within ten years over a million units had been produced. The Italian language gained a new word, "vespare", meaning to go somewhere on a Vespa. With strong cash flow emanating from the success of the Vespa, Piaggio developed other products, including the 1957
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.
In 1959, Piaggio came under the control of the Agnelli family, the owners of car maker Fiat SpA. Vespa thrived, until 1992.