Tiered Rates, Diverse Green Sedans Define New Approach

Posted on May 25, 2011

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Three sizes fit all: Matthew Strack is trying out a hybrid mix of the Prius, Fusion/MKZ, and BMW.
Three sizes fit all: Matthew Strack is trying out a hybrid mix of the Prius, Fusion/MKZ, and BMW.

COSTA MESA, Calif. — Operator Matthew Strack has set up a triple-play of sorts for future chauffeured services, which are changing amid new vehicle models and client expectations.

As of May 1, STRACK TRANSPORTATION, a 10-vehicle operation based in Orange County, offers a three-tiered hybrid sedan service that breaks down as follows:

Vehicles & Rates

TOYOTA PRIUS: $65 per hour, all-in.

ROYALE FORD FUSION HYBRID L: $75 per hour, all-in.

BMW ACTIVEHYBRID 7 (750Li): $135 per hour, all-in.

In devising this strategy, Strack told LCT he aims to gain market share from more price-sensitive clients while saving on fuel costs and offering green alternatives to all client bases.

Strack’s layered approach is indicative of an industry trying out new vehicles and pricing levels as Ford transitions from the Town Car to the MKT, Cadillac rolls out a new livery sedan next year, Royale offers stretched versions of the MKZ Hybrid, and automakers such as Toyota, Mercedes-Benz and Hyundai target the livery market.

How Do Client Levels Break Down?

PRIUS: This popular commuter compact is being offered with green, eco-minded clients in mind and clients looking for cost savings. It gets about 53 mpg with low operating costs; those savings can be passed to the customer, Strack said. Vehicle cost: $26,000.

FUSION: The mid-size Ford sedan, to eventually be replaced by the Royale Lincoln MKZ Hybrid L, is targeted to be the primary workhorse and moneymaker for Strack Transportation, which envisions it as the primary replacement for its three remaining Lincoln Town Car Executive Ls when they cycle out of the fleet. The Fusion has almost the same legroom as the Town Car, and so far has averaged 38 mpg, Strack said. He is marketing it to corporate, business travel, and airport-related clients who have typically ridden in Town Cars. Vehicle cost: $42,000.

BMW ActiveHybrid 7: This premium sized vehicle, which Strack said has more legroom than a Mercedes-Benz S400 Hybrid and Lexus 460hl, is aimed toward private jet/FBO clients and wealthy, luxury conscious consumers, foreign dignitaries, and celebrities. It gets on average about 21 mpg. Vehicle cost: $100,000.

Operational Efficiencies

FUSION: Strack projects that the Fusion will yield his highest profit margin of the three vehicles, given its pricing level and dramatic fuel savings. Even with a Royale Lincoln MKZ Hybrid, which costs about $10,000 more than Fusion, Strack expects to make up the price differential after about a year and a half of fuel savings. For now, the Fusion will be used alongside his Town Cars. “If somebody doesn’t specify a sedan, it’s possible we’ll send out the [Fusion],” he said. “It’s always been well received. It offers about the same legroom as a Town Car but nearly twice the fuel economy. I cut the fuel bill in half when I run that vehicle.”

“We’ll stack many miles on it,” he added. “It will increase our margins. Right there, it’s definitely a moneymaker.”

BMW: Strack says his clients at that level do not specifically ask for a green vehicle, but the market for elite transportation in the Los Angeles area will support the costs of the vehicle. He says he gets enough trips per month to pay for the monthly costs of the BMW and yield a profit. “I could have bought a regular BMW 7 series, but if it’s that much money, why not get [the hybrid] and market that? There is marginal fuel savings on BMW. It’s a statement that we want to conserve. The clients do not necessarily care about green, but if you are going to spend that much money on an S-Class or a BMW, why not get a green car and save on a few gallons here and there and help save the environment?”

PRIUS: The client market for the Prius is still developing, Strack says, with the compact operating at a break-even point between costs and revenues. Increased marketing of its green value and lower price point should boost its value. “In L.A., that market is definitely there,” he said.

In addition to the three Town Car sedans, Strack Transportation also operates a 120” Krystal Town Car stretch, two GMC Denali XLs, and a van. Strack plans to add a hybrid SUV once the larger models, such as the Escalade ESV, are built with hybrid engines.

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