Owning and Running a Taxi Business

Owning a taxi can prove to be a very profitable business. Despite the insurgency of ride-share applications such as Uber, Ola, and Didi, the taxi industry has seen a return to operations in recent years as users have grievances with many of the apps, especially in Sydney, Melbourne, and Brisbane. A common complaint circulates around cancellations and overcharges. This has been good news for the taxi industry as riders have chosen to return to the traditional style of 'hailing a cab' or booking through taxi apps.

Though buying a taxi company is not quite as simple as it used to be. With major reforms to taxi plates and compensation from Uber recently being issued, taxi ownership has changed. The most important part is to check who owns the taxi plates. There is still value in taxi businesses in the form of vehicles, marketing, goodwill, and contracts. But the traditional method of buying taxi plates has changed in NSW and may be similar in other states, so it is important to check.

 

What to Consider When Buying a Taxi Business

 

1. Read the News - Compensation to Taxi Drivers

 

On the backlash of rideshare applications, the taxi industry fought a long battle in the courts for compensation. This resulted in reforms to the Point to Point Service, especially in states like NSW, which saw a $645 million Assistance Package for Taxi Licence Holders in NSW.

On March 20, 2024, Uber was forced to pay out $272 million in a big win for taxi drivers and car hire drivers. It was the fifth-largest class action settlement in Australian history and one of the most successful class actions against Uber, the lawyers behind the case said.

There are a number of cases in court and proceedings happening, so it's important to read updates on the NSW Taxi Council website.

Taxi plates used to be a very expensive purchase, which is why many operators were upset by the arrival of the rideshare apps and the devaluing of their assets. With a Sydney Morning Herald article 9 years ago announcing that taxi plates in Sydney dropped to an average of $375,000, the lowest level since 2008. Licence values had the highest value at $425,000 in 2011. Today, taxi plates in NSW are managed by Services NSW.

 

 

 

2. Understand Who Owns the Taxi Plates

 

In February 2023, the taxi license ownership changed. It's important to understand these changes and how they apply to the taxi business you are buying.

NSW taxi licence reforms – what it means for you as an operator of a taxi from Point to Point Transport on Vimeo.

 

3. Do Your Due Diligence

 

Buying a taxi business can be profitable, but you need to have a clear understanding of what is included. A lot of taxi businesses also operate as hire companies or have contracts to service businesses or regular pickups. When you are buying the taxi business, you are most likely purchasing the business, any marketing material on the vehicle, radio, EFTPOS machine, and goodwill.

Depending on the state you operate in, you need to review the current taxi licensing procedures.

 

So is buying a taxi business still a good idea?

 

Yes, the taxi industry is still very profitable, especially with the increase in tourism in Australia and the opening of airports such as Western Sydney International Airport. We see major taxi companies such as 13Cabs and GMCabs thriving across Sydney. With the launch of apps like Rydo and booking directly with the companies, taxis are proving to be a good business model.

What has changed is who actually owns the taxi plates and how ownership is transferred. So it is important to conduct your due diligence when buying a taxi.

Tags: taxi buying a business businesses for sale

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