Luxury Coach & Transportation

March 2015

Magazine for the professional limousine, charter and tour industry.

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Page 36 of 109

LIMOUSINE, CHARTER & TOUR MARCH 2015 33 cles are newer, high-end party buses that seat about 28 passengers and have a re- stroom in the rear. "You should offer the public the confdence of a newer bus," Rivas says. "It's safer, under a 100% war- ranty, and if there is a problem, the part can be replaced very quickly." Max For The Minimum Avanti Transportation's Reindl has reached what many would consider the ideal business model for a medium-sized limousine company. You could call it cash-in-cash-out feet fipping. He pays cash for high-use chauffeured vehicles with cash, but like Rivas, always buys vans and buses new on three-year loans. "Everything lasts with good mainte- nance," Reindl says. "If I buy a brand new vehicle with zero miles versus 15,000 miles, I don't see the difference and the custom- er doesn't see the difference. It saves me $10,000 to $12,000 on the purchase price." Avanti buys the smaller, frequently used chauffeured vehicles like sedans and SUVs at about 8,000 to 15,000 miles each and then sells them at 120,000 to 140,000 miles, still commanding a decent resale price. The only exceptions are Avanti's Sprinter Vans and mini-buses, which Reindl always buys new because of warranties. In January, Avanti sold its frst 2013 Lin- coln MKS sedan with 125,000 miles on it for $17,000 after having bought it two years ago for $30,000 with 15,000 miles. The car did a high volume of business, racking up 110,000 miles. "That was a hell of a deal," Reindl says. "It cost me about $12,000 to run the car for two years. Now I'm going to get $17,000 for it and put in another $10,000 to get another (pre-owned car)." Reindl keeps a pre-owned vehicle for a maximum of two years. "You have to have a decent business to achieve that. Without creating a proft, you can't do it. You have to be consistent for a few years to put everything back into the company." During an economic downturn, a cash-based feet operation is less vulner- able to big losses in business. "Houston is not doing well because of declining oil prices and layoffs," Reindl says. "It's nice for peace of mind not to have payments. I can get in and out of a vehicle in a split second because I don't owe anything." He recalls when the recession caused company revenues to plunge by $1 mil- lion in 2008, he did not have to lay off any employees or sell any vehicles. "We stayed where we were at and never had a problem paying our bills. You have to be able to withstand some type of downturn in the economy for a while." — Limousine Service and a 2014 Operator of the Year Award winner. He runs his com- pany in two locations: Benton, Ky., and Nashville, Tenn., affording him the fexibil- ity of rural and second-tier urban markets. "I've never bought a new vehicle since I started. I always let someone else take the frst hit," says Newton, who frst start- ed in the limousine business in 1975 in Southern California. Private parties and corporations that own stretch limousines are good sourc- es for pre-owned deals, as well as bank- rupt limousine companies and E-Bay, Newton says. The oldest vehicle in Regal's 10-vehi- cle feet is a 2001 Tiffany Lincoln Town Car 120-in. stretch used mostly for proms and party outings. The stretch has 65,000 miles and is kept garaged along with four other stretches when not in use. "I keep everything in mint condition," he says. In another advantageous pre-owned deal, Newton bought a 2011 Krystal Town Car fve-door 120-in. stretch with 6,775 miles from a private party for $43,000. Regal's corporate feet that serves his Nashville operation includes two 2013 GMC Yukon XL SUVs and two 2014 Chev- rolet Suburban LTZ SUVs, each bought for about two-thirds of the original stick- er price. The SUVs were acquired from a rental car company auction. Newton advises against buying a vehi- cle hoping it will attract business. Opera- tors should verify a steady client demand for a particular vehicle, frst. Newton holds on to his vehicles for as long as possible, without any required time for turnover. "I run as lean as I can." He does not fnance his vehicles and pays cash. "I'm not too concerned about resale. There's always somebody to buy your cars. I'm more concerned about proft- ability. I won't sell a vehicle just because I'll get $5,000 more from the sale. You only sell your vehicle if there is a radical change in body style." Regal also runs two 14-passenger vans, 2011 Ford E350 models, that New- ton bought at $21,500 each, with 18,000 and 11,000 miles. "The vans were sold on E-Bay," he says. "They were fully loaded, black on black. A production company had bought them brand new and used them for two and a half months for crew transport during the flming of a movie." The vans were once listed at more than $50,000 each new. Newer Outlook In the vibrant limousine and party bus market of Los Angeles, operator Art Rivas has found that going new and upscale pays off in ways more than fnancial. For the last two years, Rivas has been tran- sitioning his operations from a mostly used party bus feet into newer models that serve corporate mar- kets, shuttle contracts and high-end lei- sure and special events trips. operates about 20 shuttle buses, 20 limo buses and a handful of tra- ditional chauffeured vehicles such as se- dans, SUVs and stretches. The liability and regulatory challenges mounting for limo and party buses has spurred him to lean toward new buses instead of pre-owned. "We've gone from 20 to 12 pre-owned buses, with many expiring because of car- bon flter laws," says Rivas, who is diligent about working with inspectors to stay in compliance. "Now that I've created a bigger brand, quality control has to be consistent. I can't roll anymore old buses that might break down. I can't take that chance." Rivas committed to making his feet all- new. As of February, he did not have any vehicle models older than 2010. "If you have mechanical and electrical problems that are out of the scope of most mechan- ics, you can easily get new buses serviced and back into your feet," he says. Like Rose Chauffeured Transportation, Rivas breaks out each vehicle as a sepa- rate proft unit. His most proftable vehi- Operators Art Rivas, Val Newton and Erich Reindl each have found proftable ways to buy and sell feet vehicles suited to their client markets.

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