Industry Research

How Will Limo Industry Survive TNCs And Self-Drive Cars?

Martin Romjue
Posted on October 2, 2014
Title of book by author Micah Solomon about how to inspire timeless loyalty in the demanding new world of social commerce.

Title of book by author Micah Solomon about how to inspire timeless loyalty in the demanding new world of social commerce.

Title of book by author Micah Solomon about how to inspire timeless loyalty in the demanding new world of social commerce.

Title of book by author Micah Solomon about how to inspire timeless loyalty in the demanding new world of social commerce.

Two of the most talked about topics that will define the future of chauffeured transportation are transportation network companies (TNCs) and driverless vehicles. Our LCT digital media numbers indicate the spate of coverage and articles about these topics comprise some of our most popular content ever.

When seismic changes loom in an industry, the gloom-doom reflex often kicks in. We’ve heard plenty of worry about how to compete with TNCs and musings on whether chauffeured services will become obsolete.

Read between the lines, and you’ll find inspiration to breathe more easily. It is not a foregone conclusion that TNCs will gobble up all the ground transportation business and seamlessly glide into the driverless era. Investors and techies may assume so, but innovation rarely unfolds with such simplicity. After all, one century after the advent of silent films, and seven years after Netflix began offering Internet streaming, we still have movie multi-plexes. So in that spirit, I would like to highlight some reasons why limousine operations can survive the TNC and driverless phenomena:

Crowded house: TNCs will attract more competition and then eat their own. Just witness the latest driver rivalries between Uber and Lyft. These services may find a niche (app on-demand in cities), but other competitors both traditional and new will apply the same technology in endlessly creative ways. That includes limousine services and their technology vendors, who are working on limo-specific apps. Also, company lifecycles are shortening in tandem with technology. Uber could very well be the “My Space” of on-demand transportation. Have you been on My Space lately? Facebook now rides high, but Google Plus is better and Instagram has grabbed the young. Competition in the technology era is never static.  

Pricing: On a recent blog post, I pointed out how Uber Black rates in one suburb were either the same or slightly higher than those of limousine services. That means despite economies of scale, Uber has natural limits on pricing and profit. With the growing preference for multiple tiers of service and the widest variety of chauffeured vehicles ever being offered, individual limo operators have the tools to meet or even beat TNC service in their areas. The eternal standards of good limo service will endure: No surges, no screw-ups, no stress.

Labor issues: I’m no fan of labor unions, labor regulations or city-mandated minimum wages, but the realities of business in America now revolve around such rules. And TNC drivers are getting restless. Some Uber drivers have met with the Teamsters in Los Angeles, while others have protested rates and pay policies in New York and other cities. Meanwhile, the federal government is drawing boundaries between employees and independent contractors, as FedEx has painfully learned. The big shakeout will happen courtesy of the courts and regulators. After skirmishes over insurance and safety, labor strife will emerge as a key issue. Don’t think for a minute the beastly trial lawyers will leave TNCs alone. The advantage for limousine companies is that most are already experienced and battle-hardened in adapting to employee and labor rules. Your average chauffeur, whether full or part time, is compensated and treated better than your average TNC driver. TNC drivers will soon figure that out, and they won’t stay quiet.

Industry niches: As movie theaters coexist with DVDs and Internet streaming, so too will limos remain, as long as the industry adapts to technology while fighting for regulatory fairness. The future lies in catering to market niches — which by the sheer force of 21st Century globalization and innovation — will grow across all business and consumer segments. One-size-fits-all is done. Individual and specialty options abound. Chauffeured services will find new niches and deepen existing ones. With stadium seating, concert sound and more food and beverage options, your average movie theater is far more advanced than 20 years ago, while cheap DVDs and streamed movies continue to occupy household media rooms. People like both. Look for consumers to keep taxis, incorporate TNCs, and gain more exposure to limo services.

Superior service: No matter how much business changes, the core purpose of chauffeured transportation will stay the same: Personal, luxury service. To pull that off, you will need technology — and good people. Just as conventions and meetings did not shrink because of teleconferencing, quality ground transportation will be needed for face-to-face business meetings. In a world becoming more impersonal, the craving for attentive service among clients will intensify as long as the economy strengthens and businesses can grow. Now, what about those driverless vehicles? Even in a theoretical 100% driverless universe, mobile human concierges, staffing large luxury vehicles, will possess vast market potential.

In 1998, Napster burst onto the scene based on unregulated thievery of copyrighted music, only to have the company fizzle in 2001 after losing numerous court battles. Napster was supposed to be the advent of the sharing economy, a new business model for the 21st Century that encouraged music file “swapping” and new notions of copyrights. Well, it didn’t turn out that way. I don’t visit music stores as often, but I sure pay for one-song-at-a-time on iTunes at 99 cents to $1.29 a pop or more. Uber is no different; unless governments relegate all ground transportation to a glorified, free-for-all form of hitch-hiking-for-money, Uber will have to submit to the rules that apply to everyone.

One final comparison: I grew up watching the old networking evening newscasts on ABC, CBS and NBC. In 1981, one year after the launch of CNN, I saw the cover of a TV Guide magazine showing the three network logos atop Mt. Rushmore, all crumbling because of the spread of cable TV. Three decades later, ABC, CBS and NBC still broadcast the nightly news, although with more graphics, more ads and a smaller audience. But night after night, those longstanding newscasts get better ratings than any program on Fox News, CNN or MSNBC. Likewise, there will always be potential for evolving chauffeured services, in the right place at the right time.

Related Topics: customer service, industry trends, LCT editor, Martin Romjue, staying competitive, TNCs, Uber, VIP service

Martin Romjue Editor
Comments ( 1 )
  • Alan

     | about 5 years ago

    And the issue of accidents has me and others concerned What about flashing lights from other directions changing the status of the vehicle? I'd rather ride in an exotic stretch limo for the same or little more with vehicles that actually look better Today you have more vehicles on the road that are plastic and contain junk science parts Ride with franchises

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