The madness of the London second hand taxi market continues

New cab sales of TXes are at record levels, with 154 joining the ranks in June

I keep thinking the used cab market cannot get any crazier and then every single week it does. The wilding fluctuating market may look like a textbook lesson in economics, but it’s actually an accurate detail of the roller coaster that cab prices have been riding over the past six months.

Back in December, before the proposal to reduce vehicle age limits to 12 years was first mooted, Euro VI cabs were unwanted and un- loved; early ones were changing hands in the early £20,000s. After the age limit announcement, the prices shot up, in some case by 40%, fuelled by short supply and increased demand.

Euro V values were suppressed by the fear that they would only get 12 years. Oversupply and reduced demand forced these prices down dramatically. At one-point early EU Vs were only fetching £11- £13k. Then came the decommissioning scramble. Thousands of older TXIIs and early TX4s disappeared from the ranks in exchange for a £10k pay-out from the mayor.

Many of these owners saw this as an opportunity to then buy a cheap EU V cab for not a lot more than the £10k (plus whatever they got for the cab on eBay) they had received for their TXII or early TX4. Very quickly this demand kicked in and prices for EUVs started to rocket, in some cases by 50%!

As some of the drivers who had decommis- sioned their own cabs returned to renting, demand for rental cabs, and thus rents, started to go up. This became the perfect storm, with fleets also taking the opportunity to get rid of older cabs and decommissioning hundreds of vehicles themselves. The result of this is that it’s now extremely difficult to find a cab to rent, and the few that are available are now more expensive.

It’s now coming full circle, as the shortage of cabs for sale and rent is forcing up the price of older cabs to above that of their decommissioning value (currently at £8k). Many owners are now pulling out of the decommissioning in favour of a quick cash sale to a fleet with a waiting list of drivers.

Things have got so bad that some of the traders have resorted to hanging around outside Brewery Road and approaching drivers going into the showroom offering to beat any trade-in price for their cab against a new one; this has not happened since the 1960s.

On the new cab front sales of TXes are still at record levels, with 154 joining the ranks in June. It means we are on target to have 2,000 on street by mid-July which is just over 10% of the entire cab fleet in London. If market force economics, which have dictated second-hand cab prices over the past six months, continue to apply it will be at least a year before the supply of new cabs coming in at the top of the market catches up with, and then overtakes, the loss of cabs from the bottom of the market. This means that second-hand prices will stay at their current levels and we will finally see an end to the prices rollercoaster and we will get some stability in the market again, I certainly hope so.

Image: Pixabay

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