Demand for industry services will strengthen as incomes and corporate profit improve
Los Angeles, CA (PRWEB) August 16, 2013
The Limousine and Town Car Services industry is in recovery mode following a difficult time during the recession. As the recession reached a peak in 2009, rising unemployment, reduced per capita disposable income and falling consumer confidence sent industry revenue on a downhill ride. The industry's retail sales declined as consumers substituted luxury car services for less expensive alternatives, such as taxis or public transportation. The other major factor that hurt the industry during this time was falling corporate profit, which fell 17.4% in 2008. As a result, businesses reined in costs and were less willing to splurge on luxuries such as limousine or town car services. As a result, industry revenue is expected to grow just 0.5% per year on average to $6.0 billion over the five years to 2013. This growth includes a 1.9% increase in 2013 alone, says IBISWorld industry analyst Andy Brennan.
The industry comprises a small number of fleet owners, which earn the majority of industry revenue, and an army of independent owner-operators. Growth in the number of enterprises came to a screeching halt due to the recession and has slowed considerably since 2009. In some major metropolitan areas, the industry has reached or is nearing saturation, as there are ample limousine and town car operators to service existing demand. Over the five years to 2013, the number of industry enterprises is expected to climb a modest 1.1% per year on average to 111,942. The Limousine and Car Services industry has a low level of market share concentration. About 96.0% of all firms are nonemployer owner-operators, indicating the small scale of the average operation. Furthermore, the vast majority of employing enterprises have fewer than five employees. However, concentration varies between employer and nonemployer operations. For example, those that do employ drivers have large fleets and earn an estimated 68.5% of industry revenue. The largest companies are franchised, such as Air Brook Limousine. Market share concentration has remained stable over the past five years due to the continued predominance of small operators serving their local markets, continues Brennan.
Over the next five years, the industry is expected to continue on the road to recovery, buoyed by an improved economic environment. Consumer demand is expected to remain strong as per capita disposable income and consumer confidence both improve, giving consumers a reason to spend on transportation for special occasions, such as weddings and proms. If demand from the private sector remains firm, industry profitability is likely to climb as operators keep a tight control on costs: To counter any spikes in fuel prices, operators will increase fuel surcharge. For more information, visit IBISWorld’s Limousine and Town Car Services in the US industry report page.
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IBISWorld industry Report Key Topics
This industry provides local transportation services in limousines or similar luxury vehicles, such as town cars. Service providers do not operate on regularly scheduled routes.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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