Vehicles

Tiered Rates, Diverse Green Sedans Define New Approach

Posted on May 25, 2011
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.

 

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.

Vehicles With Benefits

AFFILIATES: The use of the Ford Fusion and MKZ hybrids are growing throughout the industry, with chauffeured labels such as MTC, Topper, and Commonwealth including those vehicles in their fleets. That allows for more seamless affiliate arrangements for clients who want to stay in specific green vehicle models wherever they go, Strack said. “When I use my network to send trips out, I can be confident that in some large markets we can be consistent with vehicles.”

REBATES: Strack received a rebate for his green BMW, and plans to apply for one for the Fusion from a NON-PROFIT GROUP WORKING WITH THE SAN DIEGO INTERNATIONAL AIRPORT. Operators should factor rebates and tax credits into the cost calculation of acquiring any green vehicle, he says. “Rebates at the airport make purchasing the hybrid models easy and many times the rebates offset the premiums [higher vehicle prices],” Strack said. AVAILABLE HYBRID VEHICLE RATES HERE

CORE VALUES: Strack’s use of green vehicles is a natural fit for the eco-green conscious values he believes in and extends to his company. Green practices include recycling, belong to the Planet Tree program, using biodegradable water containers, and participating in beach clean-ups. “We have a lot of marketing ideas behind these vehicles that we can put out there to help build the green image I have wanted to create,” Strack said. “It’s something I believe in, and not just marketing. Being green and being eco-minded is something that’s in my core values for the company. As time progresses and oil prices rise, that market will build. I want to be on the forefront of it and be set for it.”

— Martin Romjue, LCT Magazine

Related Topics: business trends, California operators, Ford Fusion Hybrid, green marketing, hybrid vehicles, Matthew Strack, Strack Transportation, Toyota Prius

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