FLEET FINANCIALS: Limousine industry expert and stalwart Tom Mazza — formerly of LCT Magazine and now affiliated with an aggressive competitor — recently vented that LCT’s annual 100 Largest Fleets is irrelevant at a time when most operators are cutting fleet vehicles and retaining only profitable ones. He maintains that profit margin is the most reliable measuring stick of operator success.
Well thanks, Tom. Your competitive motivations aside, we’re flattered the LCT 100 List emerges large enough on your radar screen to warrant a “diss n’ hiss” in your e-newsletter.
We won’t get into a scrap about the fleet list since that’s a never-ending industry argument that’s gone on for years and only leaves everyone black and blue.
But we do share Tom Mazza’s dreams.
We, too, dream about an industry where every company is brave enough to disclose its annual profit margins and financial information — subject to review by an independent, accredited auditor — to determine who succeeds. If the 100 most profitable companies possess the mojo to do that, LCT is ready for them. We’ll even rename our list the LimoLux Fortune 100. Any takers?
But in an industry with only privately held companies and no publicly traded ones, how exactly will that happen? How do you force everyone from Dav El on down to a retail mom-and-pop operation to open the books on financials and profit margins? Making it all voluntary would not cover everyone, including those companies that actually are the most profitable but don’t want everyone to know how well off they are.
There also would be a potential snag to a “most profitable” list.
Let’s say you have a two-car operator who drives exclusively for Bill and Melinda Gates. The Gates’ pay him full high rates and tip very well. That operator will likely have a high profit margin. But is that operator necessarily better than, say, a 10-vehicle operator with multiple contracts and individual clients who may not make as high a profit margin on each client and vehicle, but has to hustle far more than the “Driving Mr. and Mrs. Gates” chauffeur? How could you say which operator is better based on profit alone?
So, we’re back to fleet sizes. Absent our shared dreams with Tom Mazza, the next best reliable gauge of company presence and performance is the number of fleet vehicles it operates — with the implicit assumption that a rational business owner would not keep an unprofitable vehicle, employee, or piece of equipment on the books. Whatever the recurrent quibbles about LCT’s 100 Largest Fleets List, it at least approximates and gives a proportional account of industry fleet sizes and rankings. While many factors determine a company’s success — customer service, staying power, and innovation high among them — the bottom line is that it generally takes more risk, initiative, and entrepreneurial ability to build up and run a company of 100 vehicles than one with five.
Otherwise, we’re left with the absurd proposition that Sam Walton has accomplished no more than the owner of a corner drug store.
— Martin Romjue, LCT editor
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