$JIM LUFF$: Ka Ka Ka Kia Means Cha Ching!

LCT Magazine
Posted on July 20, 2010
BACK TO BASICS: Adding a Kia into a fleet of luxury vehicles has subjected me to countless comments and jokes from friends and colleagues but all I see is $$$$$.
I will be the first to admit that there is nothing luxurious about a Kia Forte’. However, its is economical and serves a specific purpose in our operation. That purpose is to make money serving a completely different set of clients that pay just as well as high-end luxury clients but deliver a much bigger profit margin.
In this horrible economy that has decimated the industry from operators to chauffeurs, from coachbuilders to dealerships, the industry as we knew it is in the toilet. While it is clearly on the rebound, the climb back to the top sure is taking longer than the cliff we plunged off of in 2008.
With that in mind, I had to figure out a method to make money performing the core service of our business — transporting people. When business clients sharply decrease their travel, you must tap other markets. For me, this included medical transportation. I have been doing it for years. I just needed to make more money at it since it is consistent work. I realized that most workers comp insurance carriers are not interested in providing luxury transportation for their injured workers. They are interested in getting them to the doctor. Likewise there are many elderly people that need to go to the doctor but don’t want to ride in a taxi and are willing to pay slightly more than a taxi for personal service, including escorts in and out of medical facilities. They are not looking for luxury either. 
Considering that both of these corporate and retail markets are indeed interested in saving money on their expenses, I needed to find a way to charge less than the current market rate for a luxury vehicle and less than a medi-van service that typically charges by the mile and wait time combined. That is where the Kia idea was born.
Most of our trips involve out of town travel with an average distance of 100 miles away. I needed a fuel efficient vehicle. The Kia Forte’ has a rating of 32 miles per the gallon on the highway. That means we burn about seven gallons of gas on a trip. A Kia Forte’ costs about $13,000 new. With the average rate of a Lincoln Town Car being about $60-$65 per hour all inclusive of gratuity, fuel surcharges and other tacked on fees, I knew I had to be less expensive. I decided on an all-inclusive rate of $55 per hour. That means I can do the job at $10 per hour less than a traditional Town Car rate, thereby saving insurance companies and private clients an average of $30 to $50 per trip. 
With a low purchase price of $13,000, the first eight weeks of service will go toward paying off the car working a 30-hour week. The billable revenue is about $1,650 per week with an average overhead of $900 based on the same 30-hour week. There are literally tons of referral source networks that work as a broker between insurance companies and transportation providers such as myself. Think of them as being the Carey or Empire/CLS of the medical transportation industry. Once you get on their program, you will receive work every single day and you don’t need to make a $600 Town Car payment every month to get the business. You can use a car that is paid off in two months.
I will give you this word of caution: Never send the Kia out in place of a luxury vehicle. I did this once. Fortunately, the passengers were three friends and me. We had no luxury sedans or limos available on a night I went out so I called for the Kia. This is the night my friends began chanting, “Ka Ka Ka Kia” and I am still laughing all the way to the bank. They never let me forget, a Kia is no luxury vehicle so never pretend it is. Especially, if have mean friends!
— Jim Luff, LCT Contributing Editor

Related Topics: Fleet Vehicles, Jim Luff

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