Industry Research

Industry Survey Results Show That Growth Patterns Continue

Posted on January 1, 1985 by LCT Staff

For the second time, Limousine & Chauffeur has conducted a national survey among limousine operators to assess the nature and extent of growth in the industry over the past year. Questionnaires were mailed to a random group of readers and approximately one hundred responses were tallied. Although this represents a relatively small percentage of the limousine world, it reinforces the conclusions of our previous survey in every major category and indicates a continuation of the growth pattern which has been present over the past several years. It appears that operators nationwide are still discovering new market opportunities and that new operators are entering the market and trying to position themselves for long term success.

Among those surveyed, 33 percent have been in business less than two years. The next largest group, at 27 percent, are those operators who are veterans of ten, or more, years. Companies with 3 to 5 years of experience made up 23 percent of our sample, and the 6 to 10 year group rounds out the category with 17 percent.

As might be expected, late model limousines are most prevalent across the country with 41 percent being less than two years old and 46 percent being 3 to 5 years old. Of the 13 percent of respondents whose vehicles were more than five years old, the majority were noted as antique or classic models, usually operated at premium rates. When asked how often limousines are replaced, 24 per cent indicated that vehicles are turned over after one or two years. Most operators, 37 percent, dispose of vehicles after 3 or 4 years. The remainder of limousines, 15 percent, see 5 or more years of service.

Last year’s survey indicated that formal limousines were 30 percent more common than stretch limousines but these two types of vehicle appear evenly matched this year. Sedans account for approximately 15 percent of the vehicles in operation. According to this sample, a typical livery service will purchase 1.38 limousines next year. Roughly one out of every three operators will add a van or bus to their fleet in the coming year and the number of these vehicles in operation has increased dramatically over the past year. A considerable number of requests were made for more information on vans and buses in future issues of Limousine & Chauffeur.

The average limousine in this year’s survey rolled 36,388 miles in ‘84, with the range going from a low of 3,000 miles in one pampered fleet, to 150,000 in a particularly durable one. These miles were chalked up on an average of 7.21 runs per car/week. Reports of operating costs varied widely, but an average figure of $.73 per mile can be computed for the operators who maintain accurate cost records. Accurate cost records are kept by fewer than 20 percent of the liveries canvassed. The average hourly rate charged by atypical company, based on a five-hour minimum, is $35.

Full-time chauffeurs are deployed at an average of 5.32 per service. Eighty full-timers was the largest number reported by any single company. Part-time chauffeurs are employed at an average pace of 6.53 per livery. The promptness, competence, and professional appearance of the chauffeur was ranked by operators as the most important factor in a successful limousine operation. Almost half of the chauffeurs in this survey carry beepers in order to expedite service. Although operators indicate interest in cellular communication equipment, the use of this relatively expensive technology seems limited to about 10 percent of the industry this year. This is equivalent to the reported use of 2-way radio systems.

Rated just behind the importance of the chauffeur to a successful service is vehicle maintenance. 47 percent of companies use independent service facilities for most repairs. About 28 percent of operators are equipped for in-house servicing and 20 percent patronize a dealership. This has not changed much from a year ago. Following maintenance, the next most important aspects of a successful business were judged to be the setting of competitive rates, followed by the quality of new limousines, the price of new limousines and, lastly, vehicle disposal.

Although fewer than 20 percent of the companies in the survey use computers, this still reflects an increase from last year when only a few large operations were computerized. Another trend on the rise is the number of services leasing, or considering leasing, at least some of their limousines. Only.14 percent of the vehicles were reported leased a year ago, but almost every operator has at least considered leasing in this year’s sample.

Based on responses to the survey’s marketing question, it seems that the yellow pages are an effective way of garnering business. No other form of advertising was mentioned as often although magazines, radio, newspapers, and television are also utilized. A surprisingly large number of services rely on “word of mouth” from clients as their only means of promoting business. One unique company reported no advertising program but employs a salesperson to promote business. Another company has a direct mail advertising campaign. A number of operators enclosed brochures which they distribute describing the vehicles and services available.

This year’s survey indicates that the industry is growing in operators and vehicles, as well as in diversity and sophistication. The numbers, on the whole, have a positive ring but, as with any service industry, the market requires cultivation and thoughtful treatment. The industry is now providing a livelihood for more people than ever before and, hopefully, ‘85 will bring continued success.

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