Operations

Publisher's Page: Upscale Transportation In-Line with an Economy on the Move

Sara Eastwood
Posted on May 1, 1996

With so many operators creating new profit centers by diversifying their fleets and with the recent influx of sedan use playing a more prominent role in livery operations, limousine services should at least not be hit as hard in the future by depressed economic times.  However, it does seem that the limousine industry is indirectly impacted by the health of the economy.  It seems as the economy goes, the limousines industry follows suit.

In recent years the economy has shown signs of a recovery.  The unemployment rate is going down, companies are experiencing increased revenues, and the stock market recently went over 5,000 for the first time in history.

The limousine industry has also cashed in on this positive upturn.  In 1994, 68 percent of the operators nationwide experienced an increase in revenues.  Of these operators, the average increase in income was 36 percent.

In 1995, 72 percent of the operators nationwide experienced an increase in revenues.  Of these operators, the average increase in income as 33 percent.

There are also positive signs from a manufacturing standpoint.  In 1992, base unit manufacturers Cadillac and Lincoln/Mercury supplied coachbuilders with 2,000 base units, the lowest figure reported since 1980.  In 1995, Cadillac and Lincoln/Mercury supplied coachbuilders with 3,800 units, an increase of 48 percent from 1992.

Additionally, operators are commanding more money per hour from their clients than in years past.  In 1987, the average sedan hourly rate was $31.  In 1995, the average sedan hourly rate was $38, a 19 percent increase.  In 1987, the average stretch limousine hourly rate was $44.  In 1995, the average stretch limousines hourly rate was $57, an increase of 33 percent.

In 1995, nearly one-third of the limousines purchased by operators were over 85 inches.  Operators purchased more limousines than sedans despite the higher cost of limousines and the proliferation of sedans.  This shows that operators are providing the availability of a desired product – a product desired from client input.  Now the client has more money to spend.

Operators have also geared up for this new demand.  In 1989, the average fleet size nationwide was 7.7 vehicles.  In 1994, the average fleet consisted of 3.6 stretch limousines.  In 1994 the average fleet consisted of 5 limousines, an increase of 28 percent.

All the aforementioned are hard indicators about the health of an industry that seems to mirror the state of the economy.  I am not saying that during the next economic hardship the industry will suffer the same.  The industry is, however, a beneficiary when there is more money to be spent by people in the marketplace.

Related Topics: economic recovery, surviving the economic downturn

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