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Does the Limousine Industry Have Long Term Viability?

Last updated on October 10, 2011 by Sozo Staff

Rising fuel costs, foreign wars, a flailing economy – if you turn on the news or scan the Internet, sometimes it’s hard not to feel like it’s the end of the world. If you’re a business owner or investor, it’s understandable to have some trepidation about the long-term rewards of buying a limo business. But what you may not realize is that chauffeur business owners have faced – and overcome – many of the exact same hurdles, and will likely continue to do so in the future.

Fuel

Yes, unpredictable fuel costs are a constant thorn in the side of limo business owners. But will they be the industry’s downfall? History indicates the answer is a resounding no. Limo businesses survived the 1973 oil crisis and many fluctuations in gas prices since then. Meanwhile, fuel efficiency standards for new vehicles and alternative fuel exploration are paving the way for a future less reliant on foreign oil. It’s a fact of life that prices move in one direction: up. Rising oil costs aside, people still need to get to and from the airport, business meetings, and events. Just like we all need a place to live no matter what happens in the housing market, we all need a way to get where we’re going no matter what the cost of fuel. From business owners that make deals with local gas stations to limo associations that buy fuel in bulk, innovative entrepreneurs will always find solutions.

Wars

There’s no argument that wars in Iraq and Afghanistan and a crisis in Libya have put a strain on U.S. business, particularly on companies providing luxury type services. Additionally, terrorist acts in recent years have led many citizens to question the safety of traveling. But limo business owners who have been around the block before will recall that the Vietnam and Gulf wars also hurt the economy, divided opinion, and affected consumer sentiment. Limo business profits are largely based on reputation. Companies that provide reliable and safe service, trustworthy security, and an overall positive experience will be in a better position to weather hard times overseas and on home soil.

Economy

With the economy growing at just over one percent during most of 2011, it’s no surprise that some limo business owners are a bit nervous. Chauffeured transportation has seen declines as corporations have cut back on business travel and customers have reined in splurges for weddings and other events. But if we look to past patterns, the limo industry – along with the U.S. economy – has always bounced back with time. If you study the National Bureau of Economic Research’s business cycle timeline, you’ll see that the luxury transport industry has survived bumps in the road during business downturns in the mid-1970’s, the early 80’s, the early 90’s, and the early 2000’s. Back in 1995, the Los Angeles Times published a feature entitled, “Limousine Industry Riding Out Rough Times: To survive the recession, companies have compensated by shrinking their fleets and shifting to sedans. But profits remain slim.” Nearly 12 years later, the industry has survived and is going strong.

Over the last several decades, chauffeured transportation has endured a variety of challenges and through those challenges proved its innate value to the business community as well as special event markets. Whether you’re considering buying a limo business, merging with a limo business, or seeking limo loans to expand an existing limo business, you can find inspiration for the future in the successes of the past.

Filed Under: Transportation

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