NEW YORK (AP) — Chris Hundley had a choice: Change his rides or let his business die.
Hundley's business, Limousine Connection shuttled executives to airports, conferences and meetings in the Los Angeles area in stretch limousines for 30 years. Then suddenly, at the height of the financial crisis, many of those clients no longer wanted to be seen in the swanky vehicles.
Flashy stretch limousines lost popularity in 2008 when insurer American International Group Inc. came under fire for sending executives to training sessions at luxury resorts after receiving a bailout loan, he says.
"The AIG resort scandal was an eye opener for anyone in the high-end industry," he says. Corporate clients make up 60 percent of Limousine Connection's business. Ten percent comes from people needing a ride to the airport or who want a chauffeur for a night out on the town. The rest of his business comes from the entertainment industry.
At a time when many companies were laying off employees, executives didn't want to seem insensitive by riding in fancy stretch limousines. Hundley, who founded Limousine Connection in 1978, realized that he had to make changes to the business to keep it alive.
He did his research. He discovered that other limousine companies around the country were noticing the same trend. Corporate clients wanted sedans, SUVs and vans. The SUVs and vans typically cost as much as renting a limousine and have the same amenities, such as televisions, cold sodas and blackened windows. But to people on the outside, they look less lavish.
"Cost is not the issue for them, image is," Hundley says.
Hundley decided to sell most of his 11 stretch limousines to other car service companies. He normally replaces his vehicles with newer models every two to three years, but this time he added more SUVs and vans to his fleet. Limousine Connection now has 32 vehicles: three stretch limousines, 14 sedans, 11 SUVs, three vans and one mini bus.
Sedans, vans and SUVs are cheaper to buy than a stretch limousine. A stretch limousine can cost about $85,000. Vans and SUVs are about $70,000, while sedans run about $46,000.
Limousine Connection's business has improved since 2008, but it's still down 10 percent from 2007. But since then, Hundley says that several limousine companies that stuck with their stretch limousines have gone under. The company picked up more market share as other companies went out of business.
His advice: "Stay in touch with your customer," he says. "Be on top of what they desire."
Joseph Pisani can be reached at http://twitter.com/josephpisani