Everyone involved in the limousine industry today realizes that as the industry has matured, so have the issues that are important to it. L&C editors recently visited Royale Limousine Manufacturers in Haverhill, MA, to discuss issues that are relevant to the industry today. Cabot Smith, president, Dick Portors, vice president and general manager, and Steve Edelmann, director of sales and marketing, discuss safety, the effects of the gas guzzler tax and the importance of only buying limousines from certified builders.
Royale, the only coachbuilder in New England, has seen many of these changing issues evolve during its 10 years in business.
The company builds almost 200 limousines each year for operators in many Northeastern cities, including Boston, New York, and Washington, DC, and across the country.
Limousine & Chauffeur: Why is it important for an operator to buy a limousine from a coachbuilder that is qualified by either Ford’s Quality Vehicle Modifier (QVM) program or Cadillac’s Master Coachbuilder (MCB) program?
Dick Portors: It shows the interest of the builder in building a quality, safe car. It also ensures operators that the builder will guarantee the car and stand behind his product. A lot of cars all look the same, but a 98-inch car is not a 98-inch car.
Dick Portors, vice president and general manager of Royale, advises potential operators to fully examine all costs before entering the business.
Operators need to ask how long that car is going to last, how much is it going to cost to repair over the years. A lot of these cars have special electronic systems that could cost thousands of dollars if the thing gets wet and blows out, rust could develop on the sides of the car, the expenses can be tremendous after buying the car.
Operators can save a couple of thousand dollars up front but spend five times that down the road. We are taking brand new cars that people have had for three or four months and completely redoing the interiors. The interiors are made of cardboard and held together with staples — we have seen this in this business.
Vehicle manufacturing is monitored very closely by Ford with the QVM program. We think of the serviceability of the product. If we can keep an operator on the road, and he doesn’t spend a lot of money, he will remember us the next time around. So we try to make everything very simple to repair and replace. If the customer damages something, he doesn’t have to take the whole car apart to get at it.
Steve Edelmann: I think the most important thing about the program, that not enough customers give credit to, is that Ford comes to your plant and conducts a thorough inspection of the entire operation. They are doing a lot of things that really test your business as well as the product you are building.
Ford does the research that a customer just can’t do. The customer can’t check to see who you are using for your insurance, what liability amounts you carry, or the length of time you have been in business. Ford checks our records to see our warranty and follow up procedures. They really check every aspect of the business.
This year, in 1993, the finance and rebate and Extended Service Plan packages are based on the QVM program. Ford is only allowing those programs to benefit the people who buy from QVM builders.
L&C: Why should an operator buy from a QVM builder and pay a higher price than he could get from a non-QVM builder?
Cabot Smith: It all comes down to safety. The QVM vehicles are really backed by Ford as far as the safety of the vehicle. Safety is number one. Number two is making sure the coach-builder’s requirements are up to par as far as the liability insurance, warranty tracking, and after-sale support.
I think the next issue that should be addressed is insurance companies not insuring limousines built by non-QVM builders. There are a lot of companies building limousines on program chassis for half the cost of what it costs me to build a limousine because I have the insurance and put in all the safety features. That is what we have to protect the industry against.
L&C: Marsha Tortora, president of the Limousine Industry Manufacturers Organization (LIMO), is working with her state legislators in New York to pass a bill making it illegal for operators to register and/or insure limousines that do not adhere to the Federal Motor Vehicle Safety Standards. Do you believe that more states will try to adopt this type of legislation?
Smith: I think they should. Laws like that are only going to help the industry. There is a cheaper way to do everything, but is it safe? The Town Car got more expensive and builders costs are increasing, but the rates the livery industry are charging probably haven’t gone up in four years. It is hard for them to afford a car that has gone up 5% or 10% a year for the last four years.
L&C: Are there any current issues that you would like to see operators more aware of?
Edelmann: There are a number of coachbuilders that are manufacturing limousines on what they call “program cars.” These program cars are ones that rental companies had for rental use and sold after a certain amount of time. These cars aren’t built from Ford to be made into limousines. They don’t have the heavier frame, heavier ball joints, front suspension, sway bars, braking system, drums, and heavier rear end that they have on the 418 package.
People just look at the bottom line and see that they can buy a car for $5,000 less. At the same time, they aren’t going to be getting a safe vehicle and they open themselves to lawsuits, insurance problems, Ford not backing the warranties, that type of thing.
L&C: Since being certified as a QVM coachbuilder, has Royale changed its manufacturing processes at all?
Portors: I think one of the biggest things we do is a very thorough quality check on the cars. We constantly check the quality through the procedure but also at the very end. We have a four-page quality check list that we go over on every limousine we build. We don’t have a lot of warranty repairs.
Also we worked very closely with Ford. When they redesigned the car, we were involved with a lot of their engineers — with the designs and changes they made. Ford took our ideas and those of the other coachbuilders into consideration when designing the final product.
Probably one of our strong points — which doesn’t cost the customer — we were one of the charter members of LIMO and one of the original coachbuilders to join the NLA and we are still active in those groups. We have been very active in the NLA and are the coachbuilder representative in that group. It shows our total interest in the industry and in keeping it regulated with the government.
L&C: What would you recommend to an operator to ensure him that he is buying a safely built vehicle?
Edelmann: First, he should be looking to buy from a certified builder. Being a QVM builder dictates that builder will only manufacture a limousine on a 418 package. If the car the operator is looking to buy doesn’t have very low miles, the operator should question why those miles are there. The coachbuilder will tell him that it is either a program car or a demonstration model they have had for a while. If those extra miles are there, that is going to be something to look at. If they still have a question, they can call Fords 800 number and give them the VIN number to check out the vehicle.
L&C: Do you foresee the gas guzzler tax being repealed anytime soon?
Edelmann: I don’t see it being repealed. I think if it were to happen it would have happened this year. I don’t think the industry as a whole has enough strength to do what it takes to get it repealed. We are trying to do what we can through LIMO and the NLA. If it is going to happen I think it would have to happen this year because it is an election year. After this, since they had the taste of getting the money in, I don’t think they are going to let that extra revenue go.
L&C: Did you see negative repercussions in the industry when the tax was originally instituted?
Edelmann: Definitely. When people have “x” amount of money they can spend and every year the vehicle costs go up, they just have to be that much more efficient. It is getting to the point where there is no more room to cut expenses. That is one of the reasons there have been fewer coachbuilders. There isn’t that profitability that there once was. Operators really haven’t had a chance to raise their rates because their competition is so stiff. When the general public doesn’t have the money, they will spend less on travel services. That means less and less money is being spent in the livery industry.
In 1983 and 1984, cars were selling for $45,000 to $50,000 and now, eight years later, the price of manufacturing has gone up $10,000 to $12,000 since then and cars are selling for $55,000 depending on the amenities. It is a tough struggle for everyone.
L&C: What would you tell a person looking to get into the livery business today?
Portors: I would ask him what he knows about the limousine business for starters. I would be honest with him about the realities of the industry. I would ask why he wants into this business, what his reason is to get into the business, if he knows what his insurance costs will be? It’s a business, it’s not just a luxury that he can use to take his friends out on the weekend because that is when he will be working.
We have had customers who really shouldn’t be in the business and we advise them, tell them to give it a lot more thought. I’ll throw numbers at them. When they realize the day-to-day costs, they tend to reconsider. There haven’t been as many new start ups in the past year or two as before so we aren’t dealing with as many of those people.
Edelmann: A lot of people interested in getting into this business these days have a business plan and they have already looked into the financing. It seems like you are seeing a different type of quality start up now as opposed to a few years ago.
L&C: Do you see the market picking up anytime soon?
Edelmann: It seems to be getting better. We have had, as far as quantity of orders, our best year and a half ever. It’s still a fight like every business. Most of our cars are built to order these days. We always have at least a four-week lead time, whereas before we could just give them one we had in the lot.