How Much Is a Used Limousine Worth?

Posted on November 1, 1985 by Gordon Olson

If you were to ask the question of 20 people, most likely you would get 20 different an­swers. Since I can give only one person's opinion, I endeavored to search out the professionals who make their living selling these stretched limousines to see who sells what and for how much I found out that the each dealer in the limousine sales industry operates independently of one another. That is, each sales operation determines the prices themselves.

To take you back in time for a very brief history of stretched limousines, we can see the market experienced substantial growth about 1979. However, even then, limousines were purchased pre­dominate by the elite. Prices of the stretched limousines during this period and up to about 1983 were substantially higher than today. About 1983, the marketplace ex­perienced a tremendous growth that brought more limousine build­ers into the market. The tremendous competition among these builders caused the prices to drop and be come fairly stabilized.

You will notice that I only refer to "stretched" limousines, not the shorter, fairly basic limousine (generically know as "the formal") that are built or distributed by one of the big four American automobile man­ufacturers. The factory formals have that big, big name backing up their limousines, therefore these vehicles do have established new retail prices with published guides to their used values (Kelly Blue Book, NADA Book, etc.).

Realizing at this point that there are no fixed prices on either new or used limousines, one has to ask the question "How are these values determined today, and why is it im­portant to the stretch limousine in­dustry to have some sort of regi­mented pricing" After much re­search, I was able to come up with some basic criteria to help establish these questions of value and to give some understandable reasons for the need of industry guidelines.

First and foremost seems to be the stretch limousine builder's name and how the industry per­ceives the name is the builder known to represent good quality and service, and does he offer a well-built and lasting product. How long has the builder been in business and how many cars does he build an­nually. The answers to these ques­tions help determine the worth of the limousine and also helps to pro­mote name recognition.

The second consideration is the vehicle itself. What equipment does it have and how does the buyer perceive the limousine. We all know that each buyer looks for and sees things he likes and dislikes on each limousine based on how he intends to use the car. To sum up these considerations, we have three means of determin­ing value 1) Name recognition, 2) Quality of product, 3) Vehicle amen­ities.

Now that we have some under­standing of how our own industry views the stretch limousine and determines value, how does the ever-important "financial institu­tion' see us?

If you have personally experienc­ed the agony of trying to obtain a limousine loan you know that only a small number of banks will finance them Why is this so? In the early days of stretch limousines when prices were generally higher than now, banks deciding to finance this high-ticket items had no established used vehicle guides to help determine resale values. Banks found out rather quickly when they did get one of these "stretches" back through repossession or for other reasons that they were literal­ly at the mercy of a handful of businesses marketing used limou­sines.

These businesses, suspecting the predicament of the banks and their inexperience in this market­place, sometimes took advantage of the banks by bidding the limousine substantially lower than the real value. The banks, who financed high original purchase prices only to receive very low resale prices, suf­fered some large losses. These losses, even though only a small percentage of the market, created a panic among. She banking industry and word spread rapidly not to finance limousines as they were too high of a risk.

Today, there are few banks and leasing companies specializing in limousine financing who are willing to take this risk. These institutions understand the limousine business and have learned that resale values can be substantial when you know where to sell. Soon, with enough in put from our industry, the publishers of used-car value guides will see that stretch limousines have now moved into the same category with the vans that are now being con­verted into recreational vehicles. Hopefully, they will realize the stretch limousine market is a big business that requires established values. When this happens, other banks and lending institutions will be there looking for your business - and the limousine industry will take a giant leap forward.

Until then, the only true way to find out how much you should pay for a stretch limousine (new or used) is to do your homework and shop around. In the mean time if you want another opinion, give me a call. My guess is as good as yours!


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