Looking Ahead to 1988 - Predictions for the Industry in the Coming Year

Posted on January 1, 1988 by LCT Interview

In the early days of 1984, how many of us would have predicted that the total sales of new limousines during the year would increase by as much as fifty percent over 1983? And how many industry ex­perts anticipated that limousines would receive as much attention from the public, the business community, and the media as they did during that year of industry expansion?

Even after the sales of new limou­sins increased by an estimated thirty-three percent during 1983 (Ac­ cording to the Limousine & Chauffeur Research Department), few people imagined that 1984 would be such a strong year for the limousine in­dustry.

Not only did coachbuilders enjoy record sales, limousines seemed to capture the public eye. A great num­ber of new operators flooded into the marketplace, and many existing serv­ ices felt an upsurge in many seg­ments of their business.

In 1985, limousine use continued to grow, and new limousine sales rose to some 6500 units. 1986 and 1987, however, saw industry growth return to a more traditional pace of some ten percent annually as new market opportunities were divided by a record number of livery services.

After a flurry of expansion, it began to appear that limousines had creat­ed a lasting niche in the world of transportation and, having done so, might experience a period of market consolidation. The sales of new limousines stabilized between 6,000-7,000 units per year (Limou­sine & Chauffeur Research Department.)

Other factors such as increasing in­surance costs and tighter operating regulations also clouded the growth picture. Limousine associations across the country mobilized in response to these and other issues. With the formation of the National Limousine Association, the industry began to defend its interests at the national level as well as locally.

In the November/December 1985 issue of Limousine & Chauffeur, a number of industry professionals were asked to predict ways in which the industry might change in the year ahead. Responses were greatly mixed.

While some coachbuilders and operators predicted that the indus­try's spiraling growth would continue, others noted that the supply of com­mercial limousines seemed to be catching up with the recent increase in demand. It also appeared to many operators that higher operating costs could not help but restrict industry growth.

Some operators, however, ob­served that the concerns which were being referred to as "crises" within the limousine industry were simply natural business factors. According to a few operators, for example, in­surance premiums, which seemed to jump dramatically in many areas, had not risen substantially for a num­ber of years.

A few operators even claim to wel­come the inevitable cost increases as they generally proved a greater threat to younger, smaller, and less experienced companies.

Despite the sobering failure of both operators and coachbuilders during 1986 and 1987, limousine sales con­tinued to increase. When Limousine & Chauffeur polled some fifty opera­tors and coachbuilders in late 1987, they predicted continued industry growth by a two-to-one margin.

As livery operators set sales goals and develop operational plans for the coming year, the most common theme appears to be continued ex­pansion in all areas. Eighty-nine per­ cent of the people in this most recent sampling are preparing for increas­ing limousine use in 1988.

At the same time, there are a few clouds looming on the horizon. For example, Ken Boyar of APC/Allen Coachworks believes that limousine operators in areas such as New York City should expect increasing com­ petition from black cars.

Indeed, after a few years of rela­tive obscurity, black car operators in New York now have an industry as­sociation to represent themselves, as well as a trade newspaper geared to promoting industry expansion. An estimated eleven thousand black cars are now in service in New York alone.

George McNamara of Confidential Limousine in Torrance, CA agrees that sedan use represents a growing threat to limousine operators. "Peo­ple are willing to accept sedans be­ cause they seem more practical," he writes.

McNamara also feels that the limousine industry lacks the "legisla­tive clout" needed to influence regulations affecting the industry. He does not anticipate that this situation will improve in 1988.

On his questionnaire, McNamara also predicts more government limousine regulations and higher in­surance rates in 1988. At the same time, he does not expect industry as­sociations to confront these problems more effectively than they have in the past.

For many of these same reasons, Scott Schroeder of Classic Coach Limousine in Chicago does not ex­pect to see a larger number of limou­sine operators in 1988. "The biggest problems we are faced with, and al­ ways will be, are insurance costs, government regulations, and rising repair costs," he writes. Schroeder does expect the public demand for limousines to continue rising however.

Sixty-eight percent of those people responding to our request for predic­tions feel that sedans will become more prominent in the limousine in­dustry of the future. This expectation is nearly unanimous among those familiar with limousine markets in New York City, Boston, and other east coast urban areas.

Coachbuilder Matt Baines of Limousine Werks in Barrington, IL, does not predict an increasing use of sedans by limousine operators, but he does foresee a growing demand for limousines in shorter stretch lengths, as well as for conservative "VIP limousines" for use by the cor­porate market. Baines also observes that, "A smaller percentage of peo­ple are buying cars stretched over sixty inches."

On the other hand, Scott Sampson of Concept Coachbuilders in Milwau­kee, WI, George Dugas of Kelly Coachworks in Westlake, CA, and James Kinderman of Krystal Koach in Anaheim, CA predict an increase in long and extra-long limousines.

"There will be a push toward both long and short limousines," writes Scott Sampson, "along with a decline in intermediate sizes."

George Dugas also sees a trend in both of these directions. "Longer cars are going to be in more demand with the party public," he feels, "and sedans are going to be used more by the corporate community."

In general, Matt Baines has an op­timistic outlook for 1989. He predicts increasing public demand for limou­sines and, at the same time, he does not expect the number of livery oper­ators to continue growing.

One of the biggest challenges Baines sees for operators in 1988 is that of expanding rapidly enough to meet rising demands. Baines also feels that the industry will not be bur­dened with additional insurance costs or government regulations.

Still, increasing insurance premi­ums and government regulations are of concern to more than sixty percent of those who responded to this most recent questionnaire. Among those sharing this feeling are Dick Barnaby of Camelot Limousine in Hacien­da Heights, CA, and Jay Shaw of Regency Limousine in Oklahoma City, OK.

Barnaby feels that other forms of transportation are more effectively or­ganizing themselves to deal with their common problems. Both Barnaby and Shaw also cite gypsy operators as a major concern in the coming year. At the same time, neither ex­ presses the hope that associations will fight these problems more effec­tively this year.

Many coachbuilders also expect that insurance and government regu­lations will be among the major problems for the industry in 1988. Dick Januzzi of Ultra Limousine in La Palma, CA, Bruce Cirlin of Dillinger/Gaines in New York City, and James Kinderman of Krystal Koach in Anaheim, CA all expect these is­ sues to affect the industry in the com­ing year.

J. Meyers of American Custom Coachworks in Beverly Hills, CA sees a leveling off of insurance premiums, but believes that other problems "too numerous to fully list" will create a marketplace where "Only the very strong will survive." Among Meyers' concerns are the quality of limou­sines, the need for limousine financ­ing and leasing, and "the lack of business professionalism in the industry."

Dick Dickinson of National Coach Engineering in Port Sanilac, Ml also lists the availability of financing as a major problem. "Too many overnight companies are getting into the busi­ness," he believes, "and are burn­ing the banking industry when things don't work out for them."

Bruce Cirlin of Dillinger/Gaines writes that the downturn of the stock market in late 1987 may also hinder the industry. Speaking optimistically, however, Cirlin believes that negative effects from the recent market decline could prove to be short term problems.

John Bowerman-Davies of Executive Coach Builders in Springfield, MO predicts growth in all areas of the limousine industry in 1988. In the coming year, he expects to see a in­ creasing number of operators, as well as more public demand for limousines.

Bowerman-Davies also notes that the scheduled introduction of a restyled Lincoln Town Car for the 1989 model year may result in new-look limousines which stimulate the mar­ket for coachbuilders, dealers, and industry suppliers.

As the limousine industry becomes more organized and visible each year, and as industry problems are confronted and resolved by operator associations, the industry is certain to become more successful in facing challenges as they arise. This brief gathering of predictions from operators and coachbuilders indicates general optimism, but many notes of caution have also been sounded.

When the year is over and the race ends, there will be both winners and losers. Best wishes to all, and now it's time to "Start your engines!" 

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