Industry Research

How Will Limo Industry Survive TNCs And Self-Drive Cars?

Posted on October 2, 2014 by - Also by this author

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Title of book by author Micah Solomon about how to inspire timeless loyalty in the demanding new world of social commerce.
Title of book by author Micah Solomon about how to inspire timeless loyalty in the demanding new world of social commerce.

Two of the most talked about topics that will define the future of chauffeured transportation are transportation network companies (TNCs) and driverless vehicles. Our LCT digital media numbers indicate the spate of coverage and articles about these topics comprise some of our most popular content ever.

When seismic changes loom in an industry, the gloom-doom reflex often kicks in. We’ve heard plenty of worry about how to compete with TNCs and musings on whether chauffeured services will become obsolete.

Read between the lines, and you’ll find inspiration to breathe more easily. It is not a foregone conclusion that TNCs will gobble up all the ground transportation business and seamlessly glide into the driverless era. Investors and techies may assume so, but innovation rarely unfolds with such simplicity. After all, one century after the advent of silent films, and seven years after Netflix began offering Internet streaming, we still have movie multi-plexes. So in that spirit, I would like to highlight some reasons why limousine operations can survive the TNC and driverless phenomena:

Crowded house: TNCs will attract more competition and then eat their own. Just witness the latest driver rivalries between Uber and Lyft. These services may find a niche (app on-demand in cities), but other competitors both traditional and new will apply the same technology in endlessly creative ways. That includes limousine services and their technology vendors, who are working on limo-specific apps. Also, company lifecycles are shortening in tandem with technology. Uber could very well be the “My Space” of on-demand transportation. Have you been on My Space lately? Facebook now rides high, but Google Plus is better and Instagram has grabbed the young. Competition in the technology era is never static.  

Pricing: On a recent blog post, I pointed out how Uber Black rates in one suburb were either the same or slightly higher than those of limousine services. That means despite economies of scale, Uber has natural limits on pricing and profit. With the growing preference for multiple tiers of service and the widest variety of chauffeured vehicles ever being offered, individual limo operators have the tools to meet or even beat TNC service in their areas. The eternal standards of good limo service will endure: No surges, no screw-ups, no stress.

Labor issues: I’m no fan of labor unions, labor regulations or city-mandated minimum wages, but the realities of business in America now revolve around such rules. And TNC drivers are getting restless. Some Uber drivers have met with the Teamsters in Los Angeles, while others have protested rates and pay policies in New York and other cities. Meanwhile, the federal government is drawing boundaries between employees and independent contractors, as FedEx has painfully learned. The big shakeout will happen courtesy of the courts and regulators. After skirmishes over insurance and safety, labor strife will emerge as a key issue. Don’t think for a minute the beastly trial lawyers will leave TNCs alone. The advantage for limousine companies is that most are already experienced and battle-hardened in adapting to employee and labor rules. Your average chauffeur, whether full or part time, is compensated and treated better than your average TNC driver. TNC drivers will soon figure that out, and they won’t stay quiet.

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