Limousine Industry Panel Discussion on Growth, Marketing, and Regs

Posted on March 1, 1985 by LCT Interview

Page 1 of 2

At the Limousine & Chauffeur Show & Conference in Atlantic City last December, more than five hundred people attended a panel discussion moderated by Limousine & Chauffeur executive editor Scott Fletcher which included panelists from both the coach-building and livery segments of the industry. Brief introductory remarks by the panelists preceded a question and answer period covering a variety of topics. The following comments have been condensed from the transcript of the session.

Fletcher: I would like to introduce the panel members: Danny Aldridge is the national director of sales and marketing for Armbruster/Stageway Coachbuilders. David Klein is the president of Dav-EI, a national limousine network. Jon Cornell is the president of Rush Limousine in Cleveland and is the past president of the Ohio Operators Association. John Rosing is the manager of Manhattan D.C. Livery and a director of the Washington D.C. area limousine association. Matt Baines is the executive vice president of Moloney Coachbuilders. And Michael Renehan is the president of Allaire Limousine in Brielle, NJ.

I would like to start by talking about the recent growth of the limousine industry. Over the last few years, we have experienced the feeling that the industry is moving forward, that there are more cars being built, that there are more operators in the business, and the industry is becoming more visible to the public. Jon Cornell has been in the business & for five years and has experienced growth as have many other people in this room. Jon, what are your perceptions of growth in the industry?

Cornell: When I started five years ago in Cleveland, the industry was very narrow. There were mostly black limos, six-door limos, and formals, and there was not much entertainment-oriented business. Most people were not aware of limos and did not use them. I was the first to use stretch limos with bars and TV consoles and started showing that limousines were a form of entertainment. I tried to pro­ mote a new market by creating a “need” that had been non-existent and making people aware of it. That was my format for growth. I didn’t want to step on the feet of operators who had already been in business for thirty or forty years. I didn’t want to chase their accounts. I wanted to start clean with another end of the business. Diversification was important.

Renehan: Our business started eight years ago. We’re a medium size company with thirty vehicles including formals, stretches, sedans, vans, and station wagons. When we started, there were probably fifteen operators in our county. Now there are probably sixty operators from 1-2 car companies up to one-hundred and fifty car fleets. We break our marketing areas down and about sixty percent of our work is airport service, fifteen percent of our work is from the private sector, and eighty-five percent of our accounts are corporate. As far as growth in New Jersey is concerned, it’s unprecedented. The drunk driving laws in New Jersey, which are among the most strict in the country, have had a great influence on people making limousine reservations. We also get business from our twenty-four hour nationwide toll-free reservation line. That’s not only for stretch and formal limousines but also for station wagons, sedans, and buses.

Klein: Dav-El has been in business for fourteen years and over the last 6 or 7, we have been one of the fastest growing companies in the United States. We were recognized by Inc. magazine for the last two years as one of the five hundred fastest growing companies. Our growth has been in all areas: sedans, formals, stretches, etc. Currently we are finding that most of our business is coming in the corporate area. Dav-EI is a national association and our growth has come from the business that we generate for one another. We have over one hundred affiliates in the United States and Canada, and the sales efforts of each of these operators have helped the entire company. Aggressive marketing has helped us. Each city is unique and you have to go out and find what the market is to make the best use of your limousines in that city. You should try special kinds of promotions, tours, convention groups, nights on the town, or whatever it takes to get those limousines out of your garage. Watch for changes in the market. We are finding that the stretch market is leveling off and we are getting some price resistance from customers who have been hiring limousines for thirty-five dollars an hour, plus gratuity. The livery client can only take so many five-thousand dollar-a-month bills before they decide to buy their own limousine and hire a chauffeur. So our growth has been in various markets and we are always looking for new markets.

Rosing: The Washington D.C. market has spurts of business. Two out of every three years, the World Monetary Fund converges on Washington and for a ten day period we need over a thousand vehicles. Every fourth year the presidential inauguration requires four hundred limousines for a four day period.

The District of Columbia has been a conservative area for limousines. The embassies and diplomats all have their own sedans or formal limousines. Our company has tried to develop the corporate market as well as the entertainment market. We are one of the companies that introduced the stretch limousine to the area and, frankly, we received some initial resistance by some who thought it was a little too ostentatious. After several years, we see the stretch market as being one of our strongest growth areas. The other areas we concentrated on were the embassies, lobbyists, and corporations. We pointed out that it was more economical to use our service than to have their own vehicle when you consider all the internal operating costs, particularly since their needs also occur in spurts. We have also developed a new approach to try and hold onto the market that David Klein mentioned. We all walk the tightrope of working with that good regular customer who eventually does an economic analysis and determines that it would probably be cheaper to have their own limousine and pay their own driver. We’ve used an approach of going to those people and pointing out the tax and other benefits of buying their own car and turning it over to us when they’re not using it. So we provide the garaging, the maintenance and the general upkeep of the vehicle and make it available to them X number of hours per month on a guaranteed basis and also do a split on the profits when we’re using it for general livery service.

Fletcher: Growth has also affected the coachbuilders. Moloney is one of the most established coachbuilders in the country and is recognized as one of the “brand names” in the industry. I would like to ask Matt Baines to talk about the growth patterns that his company has observed.

Baines: We have built luxury limousines since 1969 and in those days we had to go out and look for the customer. Now the industry has advanced tremendously and this kind of exchange between operators and coachbuilders will help us build cars to meet the different needs in the market.

Fletcher: I’d like to ask Danny Aldridge to give his company’s perception of industry growth.

Aldridge: Armbruster/Stageway, as many of you know, is one of the oldest limousine manufacturers in the world. We built our first stretch limousine in 1922 and, through the years, we have grown to where we are today with your help. We build over forty models of cars which are designed for different types of services. Looking at the Show floor, you have seen many lovely cars with many fine features. Some fit your market area and some do not. We believe that you, the customer, have the ultimate right to choose what you need. Therefore, we offer a wide variety of cars that are designed on Chevrolet Suburban chassis, we build six-doors, luxury VIP cars, and we are one of the few manufacturers who believe in the new Cadillac C-body cars. We have grown considerably since 1887, and with your help we intend to continue growing over the next few years.

Fletcher: I would like to invite questions for the panelists.

Question: Why are the manufacturers moving toward dealer distribution instead of direct distribution, causing operators to pay higher prices for limousines?

Baines: As the industry has grown, it became difficult to handle our customers one by one. The other major consideration is service. We are entering a new program where distributors will have trained personnel to service our product. We cannot service people on a daily basis out of the Chicago area as effectively as we can through a dealer network where facilities commit themselves to service a certain number of vehicles in a particular area.

Aldridge: Armbruster has a multifaceted marketing program in that our six-door cars are sold primarily through the funeral car distributors across the nation. As far as the cars that you are primarily using, they can be bought directly from the factory in some areas, and through distributors and automobile dealers in other areas. As Matt said, service is the key. We are going to try and service you efficiently and still pro­ vide a product at a reasonable price. We are currently trying to establish a national network of independent service centers that can work not only on our cars but also on Moloney cars, O’Gara cars, and others.

Question: What is the viability of the down-sized ‘85 Cadillac for conversion into a stretch-limousine?

Aldridge: Obviously the ‘85 C-body does have a smaller trunk. Cadillac is addressing this problem and has told us that they will have a larger trunk in the foreseeable future. We have to take what the manufacturers give us to work with and in this case it’s a small trunk. We have two choices, to leave it as it is or to enlarge it on our own which would increase the cost by several thou­ sand dollars. At this time, we don’t feel that consumers will bear that in­ creased cost, so we are making the car available with its standard trunk which can hold a reasonable amount of luggage. It may not be the car you need for your airport transfers but it does have a place in your fleet. If you specialize in airport transportation, you will probably want a full-size Cadillac or Lincoln, or a Suburban limousine or a van.

Fletcher: Is Armbruster planning to go into immediate production on the C-body?

Aldridge: We are in production, we have cars in the field, they have only been in use for three or four months, but they are holding up in the field. We have not had any major problems as far as brakes, transmissions, air conditioners, or anything of that nature. But the car is in production and they are holding up at this time.

Question: Does the Cadillac warranty still apply to a C-body Cadillac when it’s converted into a limousine?

Aldridge: Technically, when any Cadillac, be it a Fleetwood Brougham, Sedan DeVille, Eldorado, or whatever, is altered in any way, the warranty is null and void. In most cases, however, you will be able to work with your local dealer to get your car serviced under warranty if it has an engine or transmission problem. You have not had a bin­ ding warranty in the past on any Cadillac model stretch-limousine. Armbruster is looking into several independent sources that can give us a warranty to cover the complete vehicle that we can pass along to you. We want to be able to warranty the engine, transmission, drive- shaft, and the rest of the car, and be able to take care of everything for you but this program is not yet in effect. You have no problem with Lincoln limousines because Lincoln Town Car limousines are covered by the same warranty that they had before being converted. They cover the engine, transmission and rear end, and we cover the driveshaft. We hope to offer a warranty covering the entire vehicle sometime in the very near future.

Question: Don’t limousine distributors take unfair advantage of small operators with limited buying power?

Aldridge: Distributors and dealers actually provide advantages for operators by working with you on financing, leasing, trade-ins and other services that most manufacturers are unable to provide. Where else can you dispose of a car with 150,000 miles on it? You need to have this full range of service.

Question: Getting back to David Klein’s comment that the corporate market segment is growing, is this the area with the most potential or are other markets also growing?

Klein: All segments of the market are growing but I think that the most growth will be seen in corporate travel. Nationwide, there seems to be a need for limousines without bars and televisions like Cadillac has been building for many years. The coachbuilders have not been very sympathetic to limousine operators. We have been talking to deaf ears until Dillinger/Gaines started building corporate limousines. Coachbuilders need to realize that corporate business is important to us and we don’t have a supplier like Cadillac anymore.

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