15 thoughts on “Tow Companies Lose Money in Snowstorms?”

  1. Waldo, do prices change on tows in such weather? It seems very likely that these towing companies set their prices with the assumption that conditions will not be this bad. I would be willing to bet that pulling a car out of a ditch in the sun or off of a guard rail in the rain does less damage then out of a snow drift, fighting ice. Most calls, for that matter, are probably made about illegally parked cars or those in accidents in somewhat normal conditions. If there is no change in the prices due to snow, this should actually make a lot of sense.

  2. CR UVa, if that were the case, why wouldn’t they just close up shop for the weekend? In any rational economic model, why would a business lose money under these circumstances? It doesn’t make any sense.

  3. “Driven to a rival company” is easy to say but probably doesn’t happen. Under these conditions, when our car is stuck we take what we can get and rejoice that -anyone- will come.

    And we will do it again next time. Partly we’re ashamed at our stupidity for going out in a 2-wheel drive car unfit for the conditions.

    Wonder how many are still calling the Lethal Wrecker blood suckers under its new name, After Five Towing, because they weren’t paying attention when the name changed.

  4. Tiger Woulds, take this from the eye of a business owner, and not as you. Could you simply assume people will forget? Plenty don’t, and risking even one angry customer has the potential to carry a lot of people over to a competitor.

    As for changing names, that’s only going to be a temporary fix. Bad service is bad service, regardless of the name.

    Besides, the sense I get from this article is that not everyone asked to have their car towed, so some third party has been getting some of these cars towed, leaving people to foot a bill they wouldn’t have otherwise, and they would not have a choice, as a result, in choosing who will free their car. But someone did, and to the tow companies, all that is important is that they are able to maintain business.

  5. if the tow drivers knew how to actually use the tow truck equipment, the equipment wouldn’t break as the owner stated. maybe he should hire people with more education, higher than the 6th grade and who can follow directions. there’s NO WAY these companies are losing ANY money on this storm.

  6. Police will tow abandoned vechiles – and you can get fined for it as well. I wrecked my car when I was 17 and walked to my friend’s house for help. The parents told me not to worry about my car that we’d deal with it in the morning and drove me home. The next day, they called to let me know that the police wanted to charge me with abandoning my car. Good thing its a small town and they explained the situation and got them to leave me alone.

  7. I’m siding with CR on this. First, I’d guess that a lot of the towing in question was required by the City or County just so they could get snow plows, maintenance crews, and emergency vehicles through, and the City/County probably get reduced rates. Second, there’s nothing that keeps a tow truck from getting stuck in a snowbank on its rescue mission, and that would require another 2 crews to go fetch–1 for the struck vehicle and 1 for the stuck tow truck. Since they can’t bill the original vehicle owner for 3 crews, they’ve just lost money. Third, the amount of time it takes them to remove a vehicle and store it safely increases–a job that might, on a sunny or rainy day, take them 2 gallons of gas and 25 minutes could use up 1/2 a tank and 3-4 hours in a snowstorm like this. Time is money, and they are losing lots of time under these conditions. Then there are fleet maintenance costs, which has to increase in conditions like these–any other vehicle running 24/7 in such weather would.

    These are strictly suppositions–I am not in the towing business and I hope I won’t have to be towed anywhere during this week. Just some common sense observations as to how and why all these towing companies would lose money even though they are getting more calls than usual.

  8. The third party having the cars towed are the police. They have had to do it because they are in the way of the plows.

    I agree with Waldo, in that I doubt that they are losing money. But I have little sympathy with those who’s cars have been towed.

    I have a rear wheel drive vehicle and got caught in town, a)- because i had to work and didn’t get off until right as the snow started and b)- because there were so many people clogging up the roads, and going nowhere, so the snow started accumulating past the point where I could’ve made it home while I sat in traffic.

    I know how to drive in snow, and know the limits of my vehicle. So instead of trying for the futile, 2 and half hours after I left work (normally a 45 minute 26 mile commute) – I had the sense to give up and get stuck in a hotel parking lot where I stayed the 1 night.

    On sunday after the snowing stopped I went back to the hotel dug out my car and moved it somewhere it wouldn’t get towed.

    I’ve never seen so many cars stuck in such dumb places.

  9. Oh, I don’t doubt that there’s a lot of overhead involved with running a tow company in a winter storm. But I do not believe for a minute that they’re operating at a loss. That’s totally irrational. Most people have cars towed so seldom that they have no brand allegiance. Most of us just know to avoid Lethal (now named “Cavalier Towing,” not “After Five”—they’d planned to be renamed the latter, but switched to the former after the word got out). And so many people are AAA members that they just go with whoever the auto club sends.

    There’s simply no economically rational reason why tow companies would lose money in snow storms. If they were losing money, they’d close up shop for the weekend.

  10. I think one thing everyone is missing in this scenario is the formality of the relationship between City Police and the tow companies. If the Police are utilizing the services of an outside vendor (the towing companies), there must have been some type of public procurement process to establish the relationship in the first place.

    In turn, if there was a public procurement process, then there must be some type of contract or agreement between the City and the towing companies for tows initiated by the Police Department. Are the rates that contracted towing companies are allowed to charge vehicle owners (for Police initiated tows) spelled out in those agreements? If so, then what are those rates and are the towing companies adhering to those rates? If not, then why did the City not have the forethought to pre-establish those rates in the first place (in order to set a fair balance between the needs of the towing companines and fairness for the vehicle owners)?

  11. There’s simply no economically rational reason why tow companies would lose money in snow storms. If they were losing money, they’d close up shop for the weekend.

    Not true.

    To provide an example (using completely contrived numbers, as I’m unfamiliar with the actual economics of running a towing business), let’s say a company’s fixed costs are $6000 per month (~$200 per day) per truck, the variable cost of a tow (labor, fuel, etc.) is $50, and they charge $100 per tow to the customer.

    Using those figures, it normally takes them 4 tows to break even (4x$100 – 4x$50 – $200) each day, after which they start turning a profit.

    On blizzard days, say they only manage to do 3 tows due to all the delays, etc. That means they’re losing money: they’re only generating a $150 contribution toward their $200 fixed costs, a net loss of $50.

    BUT, that doesn’t mean they’d be better off closing up shop, as were they to do that, they’d be losing even more–their full $200 in fixed costs.

    So there’s a very economically rational reason why they might lose money in snow storms and yet not close up shop.

  12. I still don’t think that the math works, though. See, their complaint about losing money is that they’re damaging their equipment. If their equipment is damaged, that eats into both fixed costs (they need to repair or replace the damaged equipment) and variable costs (they can’t tow on broken equipment). If they lose a truck, that’s a pretty big financial hit. Better to let it idle for a few days, respond to non-tow calls (dead battery, keys locked in car), or respond to calls on already-cleared streets for traditional broken-car problems.

    The scenario that you describe makes sense on its own, but given the source of their financial loss, I don’t think it speaks to the situation here.

  13. Businesses not run by the terminally stoopid (people we have given authority to actually touch, control and impound our private property!!!) have defined cost structures and pricing. UPS or Fedex have different fee sructures for destination, speed and service level. I suspect a local towing outfit’s cost structure is infinitely simple.

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