Industry Research

Small Companies Need Competitive Rates, Service to Contend with Larger Fleets

Posted on July 1, 1991 by Scott Fletcher, LCT Editor/Publisher

After dividing the responses to our annual survey of livery operators into three groups according to fleet size, I thumbed through the forms returned by companies with ten vehicles or less to see how they responded to questions concerning the corporate market. This group of relatively small companies, which represents more than half of our readers, reported that one out of every three trips carried a corporate client.

Out of 180 responses from small companies, very few came close to the 77 percent ratio of corporate business averaged in the survey by companies with more than 20 vehicles. At the same time, very few small operators averaged gross monthly revenues of $8000 per vehicle as reported by large companies.

Elite Limousine of San Jose, CA is a ten year-old company with seven vehicles that stood out from most other small services in many of the survey’s statistical areas. According to owner Chuck Hannah, nine out of ten passengers are corporate clients. Hannah attributes the other 10 percent of his business to hotels and private clients.

Elite operates four limousines and three sedans. At hourly rates of $55 for a limousine and $45 for a sedan, his vehicles produce nearly twice the revenue averaged by our sample of companies with fewer than ten vehicles. Hannah’s success is a rare instance of a small operator doing what it takes to compete with larger competitors on their own turf. Our lead story in this issue looks at the lucrative corporate market from both sides of the partition.

The corporate market is just one segment of the limousine industry that has shown reassuring signs of life in recent months. Many operators experienced steady business during prom and wedding seasons and limousine sales in the second quarter appear to have returned to pre-war levels.

Many coachbuilders expect an increase in limousine sales this fall as aging vehicles are replaced with ’92 models. One reason to anticipate a busy fall is that the Limousine & Chauffeur Show, which always stimulates sales, has been moved from its spring time and place to December 8-11, 1991 at the Baltimore Convention Center.

Once again, the Limousine & Chauffeur Show will be presented in cooperation with the National Limousine Association and will be a valuable and enjoyable event for all concerned. Small and medium-sized companies will have an opportunity to emulate their larger competitors in one important statistical area... by buying new cars. Sixty-one percent of limousines in fleets of 20 or more vehicles are less than two years old.

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