Spending is estimated to advance another 7.1% in 2018 and will expand to $1.7 trillion total by 2022.
FRASER, Mich. — On Dec. 11, Nick Kokas, vice president of global operations for Brentwood’s Distinguished Executive Transportation, took to Facebook to announce something most operators probably thought was years away from occurring: He lost an account to autonomous vehicles.
“I was not planning on sharing this information publicly, but I’ve decided to do it in a hope the conversation within our industry changes. As of last week, after leaving a client meeting in preparation for our industry’s biggest annual event in Michigan [The North American International Auto Show], we learned we would be losing this account to autonomous vehicles. YES, YOU HEARD ME CORRECTLY. The account is an auto manufacturer, and as of Jan. 2018 they will be using their own autonomous vehicles to transport staff and visitors visiting their two main centers.”
In an email to LCT, Kokas stated although it would not be appropriate to comment on the client name, he was told they will be using a luxury sedan as well as a cross-over SUV which they showed him during a tour. He was also given a chance to ride in one of the vehicles. During the time his company served the client, almost all trips were airport transfers and hourlys in sedans since 2009.
This is the first case LCT knows of where a limousine operator has lost a corporate contract to driverless cars.
“This brings me to my point: The focus within our industry is unfortunately misguided. There is too much of a focus on Uber and Lyft. These companies are NOT our biggest threats. Volvo will be releasing over 20,000 autonomous vehicles over the next 12 to 24 months. GM will be releasing over 40,000 FULLY autonomous vehicles over the next 2 years without human drivers strictly for commercial use using their OWN designed rideshare app cutting out both TNCs. Since 2013, when Uber entered our market in Detroit, we never lost an account. Not ONE! In fact, we have seen double digit growth each and every year. In fact, I think Uber forced and taught us to become more efficient. Now Uber is being disrupted — and it’s by companies like Ford, GM, and BMW.”
“Shockingly, this is not being talked about because, for the last few years, our industry has been saying this is decades away; it isn’t. With over 100,000 autonomous vehicles coming to the market over the next two years, the potential exists for a larger, more disrupting impact to us than both Lyft and Uber combined. To put this into perspective, Ford has publicly announced they have invested over $150 MILLION in ‘mobility’ solutions. Think about that: $150 million to design and implement a program that competes against you and I.”
Adapting To Autonomy
At this point in time, no one really has an answer for how the chauffeured transportation industry should adapt to the oncoming onslaught of self-driving cars. There are many who think the technology is decades away, when in reality there are thousands of trips happening already on public roads. “In business you try to forecast as much as possible, and this is the first time I can honestly say I have no idea how to project a five-year standard forecast which I have been doing all my years in business. That’s a red flag for me and a bit scary,” he said.
“People who are closest to me know this is the one thing that keeps me up. I’m surrounded by engineers and executives that work in the automotive world every single day. I'm from the Metropolitan Detroit area and have these conversations all the time with them off the record. The bottom line is a car company can make more profit selling a car as a service and producing over $100k in income a year per car than selling a car for $40k and you keeping it for seven years. Making a 10 year industry prediction is very difficult at this stage.
“What I do feel will happen is one or several of the current major chauffeured car companies will be acquired by one of the major automakers via an investment or outright purchase. A C-suite executive from one of these auto companies actually told me this is on their radar and is being studied as a way of purchasing access to a global index of active passengers that use cars as a service. It might be cheaper from a customer acquisition cost standpoint than starting from scratch.”
Uber Not The Biggest Threat
When asked how he could be sure he hasn’t lost any business to TNCs, Kokas said, “This is easy, as it’s our business to know who are clients and accounts are. Since 2013 we have not lost a single corporate account, which I attribute to our adjusted business models to combat on-demand. We have actually grown our customer base since then. Other than an airline which no longer flies into Detroit, we still have the same accounts from 2013 using us today. We actually anticipate 2018 to be a no growth year even though the corporate tax environment is expected to improve dramatically for our customers.”
In order to combat Uber and Lyft, Kokas deployed chauffeurs and created shifts with an over-supply to cover a geographic area of roughly 45 radial miles in 2013. This created an availability and response time for the company that rivaled even the largest competitor in the state.
Soon, Brentwood’s became known as the go-to company by even local chauffeured car businesses to help out when supply was needed. Since then, the window that customers would call ahead of time kept getting shorter because of their adaptation to rideshare expectations and response times they offer. “We were able to keep up and increase supply organically over the last four years making our corporate clients not have a need to look elsewhere. I really believe this shift on how we handled our supply is what kept our accounts from not leaving.”
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