Hire Industry Stretching Towards Limousines?

Plummeting residuals of up-market MPVs could herald the return to UK streets of that most unlikely - but extremely elegant form of public transportation - the formal limousine. Faced with first year depreciations that can be well over 40 per cent, private hire operators around the country are now starting to look anew at the economics of switching to vehicles like the Binz E-Class based 8 seater, which offer similar capacity, but with a lot more class.

“The limousine can do many of the same jobs as an MPV does, but some that it can’t. People do say that you cannot do airport runs because there is no room for six people’s baggage in the boot - but if that’s such a big issue, why do you regularly see MPVs shuttling between Heathrow and Central London with dinky little luggage trailers bobbing along behind? Our vehicle may cost more initially, but having one opens the door for taxi firms and executive travel companies to branch out into more profitable areas of business”, says Peter Smith, CEO of Binz UK.

“Whether you look within the industry from sources such as Glasses Guide, or outside it to What Car and Parkers, the message is the same: big MPVs like the Chrysler Voyager lose between 30 and 40 per cent of their value within the first year. A three year old Voyager with 120,000 miles on the clock - a conservative figure in private hire use - can be worth less than £7,000, when it comes due for replacement”, Smith continues.

At the moment, though an operator might have to pay £978 a month and a £8,000 down payment for the privilege of running a Binz E-Class based limousine, “The vehicle probably only needs to do one extra run to the theatre or a wedding every other week to comfortably close the leasing package gap between it and the MPV alternative”, adds Smith. Supply, according to Binz UK, for its fully NCAP crash-tested and Mercedes-Benz warrantied 6 door limousines is closely matched to demand, so residuals should be firm for a long while to come.

31 December 2005 Staff
 

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