Overall, the automaker sold 100,000 units, reaching 103,587 vehicles for 2018.
Before you invest your hard-earned dollars to expand your fleet or upgrade existing equipment, first invest a little time in careful planning.
Shop from a position of power by learning what separates one vehicle from another, setting up financing ahead of time, and bringing a well-maintained trade-in vehicle to the table.
Successful operators create formulas for when and what to buy. They get the best financing rates by aggressively shopping around. They consult books, check references and call friendly competitors for input.
Your vehicles are the single largest investment you make in your company – so it’s worth taking the time to get the best deal.
Plan your car purchases as you would any other major business decision – it’s all about money.
Operators who plan ahead and arrange their financing before sitting down at the bargaining table have greater leverage when negotiating with a coachbuilder, dealer or private seller. They also have a better understanding of what they can afford.
The following nine tips will help operators get the best deal when leasing or financing.
Put all of your financing information into a nicely bound, organized package. Use it to get offers from a variety of companies.
Your package should include:
Buyers with marginal credit often have difficulty getting the money needed to expand their fleets, but may have better luck if they are placing old vehicles, says Peter Corelli of Lakeview Custom Coach.
“If you can show that upgrading equipment will save you money – by reducing repairs and downtime – you’ll have a better shot,” he says.
Corelli adds that operators with marginal credit must show some level of consistency in making payments on time and provide supporting materials like financial statements.
Obtaining a car loan will save you money, but many operators are forced into leases
Financing a vehicle is preferable to leasing, but many smaller operators don’t have the resources to obtain a loan, industry officials say. A down payment that is often 10% or more and a sterling credit history are often required to obtain a livery vehicle loan.
The major lending institutions providing limousine operators with loans, including Ford Motor Credit and JP Morgan Chase, require high credit scores and that the businesses they are lending to have been in business for a minimum of five years.
That leaves a lot of operators – especially new ones or those with low credit scores or bad payment histories – turning to leases.
“Leasing allows people to get into the business with little money down,” says Eddie McCoy, president of FASTTRAK Livery Systems and a former operator. “If you work hard and make money on that car, it could be worth your while [to lease]. But your inevitable goal should be to buy.”
Livery leases are obtained through a broker or middleman, who guarantees the loan to a lending institution. The broker charges a fee or higher rate to earn a profit.
Those leasing a car can pay between $2,000 and $10,000 more over the life of a vehicle, depending on their credit rating, than they would if they were able to purchase one, McCoy notes.
Consult an accountant or financial planner before seeking a loan or a lease and consider the following 13 tips.
Two of the limousine industry’s leading independent dealers offer an interesting contrast:
The customers of Universal Limousine Distributors in Wayne, N.J., tend to be larger companies and to buy vehicles rather than lease, says President Toni Trabb.
She says 75% of her limousine customers buy their cars and 90% of her sedan customers buy.
By contrast, the customers of Lakeview Custom Coach in Oaklyn, N.J. tend to be smaller operators. About 75% of that company’s limousine customers lease, rather than buy, Corelli says.
Track revenue lost to farm-out and don’t let your ego or fads dictate what you buy
Operators are making educated choices about when and what vehicle to buy by developing strong farm-out relationships with competitors and following customer requests.
A tax break that allows operators to write off 100% of a commercial vehicle weighing over 6,000 pounds – if the purchase is made by year’s end – has influenced some buying patterns. But the decision of what and when to buy is generally best made by understanding your clients’ needs.
The following 12 tips will steer you up in the right direction:
“Fads always start off at the extreme and end up somewhere in the middle. If you are in the business for the long haul, you don’t want a 220 superstretch. It has a limited audience and it’s not easy to find a place to get it serviced.”
“Manufacturers will only build so many short cars a month – they are a loss leader,” Corelli says. “The difference e in price to the coachbuilder is really just some metal and wiring between a 120 and a 72-inch stretch.”
Limousine operators are developing formulas for determining when to expand their fleets.
Mathew Smallwood, president of Elite Coach in Raleigh, N.C., for example, runs reports from his back-office software system that tells how much business he farms out.
“We try to get $5,000 per vehicle per month,” he says. “If I do $5,001 in farm outs, I’ll buy the car.”
Smallwood, who runs vans and sedans, looks for two or three-month trends and ignores occasional spikes, such as those caused by a major sporting event like the Super Bowl or a large local convention.
Nick Tropiano, president of Tropiano’s Limousine in Philadelphia, says he bases his purchases on the number of jobs framed out over a period of six weeks to two months.
“If I give 10 to 12 jobs per week away for an extended period of time, I know I have to make a purchase,” says Tropiano.
He says he averages 70,000 miles on his sedans and replaces them every three years.
Used vehicles allow many operators to expand their fleets. Those who take care of their vehicles get a far greater return when it’s time to sell. Here are some tips for buying and selling used vehicles.
“If the coachbuilder is no longer in business, you need to get a great price because if you have a problem, you have nowhere to go for help,” Corelli says.
“Someone who’s educated is going to come in and add up all those numbers when he’s purchasing that vehicle from you,” Corelli explains. “If there’s $600 worth of work, he’s going to want $2,000 off the vehicle.”
Overall, the automaker sold 100,000 units, reaching 103,587 vehicles for 2018.
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