Industry Research

Annual Industry Survey 1986

Posted on March 1, 1986 by LCT Staff


Results are in from the third annual Limousine & Chauffeur operator survey Questionnaires designed to assess the nature and extent of growth in the limousine industry over the past year were distributed at the shows in Las Vegas and Atlantic City resulting in one hundred and fifty responses from operators across the country. This year’s survey supported last year’s findings in some areas, while changes occurred in other areas We also asked a number of new questions which add some interesting angles to our picture of the limousine industry One new finding, for example, is that the average number of vehicles owned by the services polled is 8.2.

Like last year, the majority of our responses, eighty percent, were from owners of livery services. Remaining responses were given by managers and chauffeurs. The general picture drawn this year is one of a healthy industry One indication of livery vitality is that the industry still attracts new operators. Forty-one percent of this industry sample have been in business one or two years. This figure is up from thirty-three percent last year and indicates that entrepreneurs continue to see potential in the limousine marketplace. It also reflects the continuing health of the American economy in general.

Twenty-five percent of our respondents have been in business from three to five years, and eighteen percent have lasted more than ten years. Interestingly, the smallest group, at sixteen percent, started their businesses between 1976 and 1980 — a period of a relatively recessed economy.

Late model limousines continue to be most common in the industry. Ninety percent of the limousines represented in our survey are less than five years old and sixty-six percent of them are newer than two years of age. The remaining ten percent includes classic limousines as well as other older models.

Our ‘85 survey indicated that most services, thirty-seven percent, replace limousines after three or four years of use, and the current survey reinforces that conclusion. The percentage has increased to fifty-two Thirty-six percent of this year’s respondents claim that their vehicles are disposed of after one or two years, while another ten percent use limousines five to six years before selling or trading them.

The average number of annual miles driven in a limousine dropped slightly this year to approximately thirty thousand miles for a stretch- limousine, thirty-one thousand for a formal or sedan, and twenty-seven thousand miles for a van. Last year’s average for all limousines was slightly over thirty-six thousand miles. These miles are compiled on an average of 10.39 charter runs per vehicle per week, a figure which increased from 7.21 last year.

The one hundred and fifty services surveyed plan to buy an average of 1.79 stretch limousines in ’86 - a total of two hundred and sixty-eight among this group of operators. If this average held for every limousine service subscribing to Limousine & Chauffeur, more than eight thousand new and used limousines would be purchased for livery use this year. This average is up from 1.38 in ’85. In addition, approximately three out of every four services plans to buy a sedan, and one out of every three plan to buy a van or bus. One out of every two services expects to lease a limousine this year.

Rates have generally held even since last year. The average rate reported last year was $35 per hour for all types of vehicles. This year’s figures are $41.10 for a stretch- limousine, $30.75 for a formal or sedan, and $31.13 for a van. The average of these figures is once again $35 per hour. The lowest rate charged for a stretch or formal limousine was $25 and the lowest rate for a van was $20 Thirteen percent of the stretch operators charge $50 to $60 per hour, and two sedan operators have rates of $50.

Communication equipment is one aspect of the industry that changed considerably in the past year. Whereas only about ten percent of the operators last year used cellular telephones, thirty-one percent of this year’s services have them. This overshadows the seventeen percent of limousines equipped with 2-way radios, a category which ran neck and neck with cellular phones last year. Many operators noted that they use portable cellular phones, or briefcase phones, and place them in a car whenever requested. Like last year, about half of all chauffeurs carry a beeper. Four percent of the limousines in our sample carry CB equipment.

Another way in which times are changing is the growing number of female chauffeurs. Although women have not yet been seen behind the wheel in some parts of the country, readers of Limousine & Chauffeur are reporting many success stories about female chauffeurs and women operators. Our survey indicated that women currently account for eight percent of the nation’s chauffeurs. It would not be surprising to see this average in­crease in the coming year.

Nearly every operator requires that chauffeurs wear a uniform or a suit. Suits are slightly more common, at fifty-seven percent, compared with uniforms at forty-three percent. Seventy-four percent of the operators surveyed this year include driver gratuities on customer invoices. This is a definite change from earlier days when tips were routinely left to the discretion of customers. Operators and chauffeurs find this to be a controversial question, and strong opinions are found on both sides.

Operators were evenly split on the question of charging customers for damages caused to a limousine. Some operators noted that they deal with damages as they occur and do not follow a specific policy. Services were also divided on whether or not they regularly farm- out business to other operators. Fifty-seven percent of the respondents farm-out business, and the remaining forty-three percent choose not to.

On the question of advertising...operators indicated that the most effective way of attracting business is by word-of-mouth. Almost equal in effectiveness is Yellow Page advertising. These two types of promotion seem almost universal among livery operators, and no other media was judged to be nearly as effective. Newspapers were the next most effective form of advertising followed by magazines, radio and television. Drivers were also noted as a being effective in promoting business, as were mailings.

Operators were asked to rate the importance of the following six factors in relation to the success of their limousine service: competitive charter rates, used car disposal, price of new limousines, ease of vehicle maintenance, driver morale/ appearance, and quality of new limousines.

By far the most important factor to these operators was the impact of the driver on the success of a business. Last year’s survey reached the same conclusion. Moving into second position in importance is concern for the quality of new limousines — a factor which finished fourth last year. This was closely followed by the price of new limousines, and ease of maintenance.

Surprisingly, the rates charged by a livery service were seen as a comparatively unimportant consideration. This can be interpreted to mean that customers are often more interested in good service and equipment than they are in price. The disposal of used limousines was, like last year, judged to be the least significant concern in operating successfully.

Despite a nationwide dearth of affordable liability insurance for limousine operators, the industry is continuing to enjoy its most profitable period ever. At the same time, however, the ongoing growth of both the operating and coach-building segments of the industry, has caused some limousine professionals to fear a lowering of standards in the building and operating of limousines. One of the concerns is that problems within the industry will lead to increasing regulation by the government.

There has, in fact, been a tightening of limousine regulations in many parts of the country as the industry becomes more visible to legislators. Fortunately, the industry is taking part in the setting of new standards through the efforts of the National Limousine Association, regional associations, and private operators. Although some recent legislative announcements have appeared to be restrictive, many operators look at new regulations as natural growing pains accompanying a healthy industry. If so, the prospects for ’86 should be bright.


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