There are lots of factors to consider when deciding whether to rent your taxi from a fleet, lease it from a dealer or own a cab freehold.
If you’re new to the industry, renting from a fleet is always the best option. The driver can learn the ropes and get a better gauge of earning potential without the long-term debt of dealership leasing or buying. More importantly the cabbie can see whether the job itself is for them too before committing.
Rental offers drivers a safety blanket by not being strapped up with what is now substantial debt that requires paying even when the driver is unexpectedly sick for a prolonged period. The cab is maintained and licensed meaning less hassle and often suits part-time workers dipping in and out of the job.
Once a driver has a good gauge of the revenue they can generate and are committed to the career as a cabbie, the driver will either decide to carry on renting or take the plunge buying their own.
We’ve spoken about the benefits of a rental cab, but there are some downsides too. Long-term, financially a driver is better off cutting the middleman out and buying their own vehicle. The average electric taxi costs £350 per week to rent meaning a monthly cost of around £1,400. These monthly costs actually match up pretty evenly to that of taking out a 5-year PCP lease on the same taxi, but crucially the taxi owner will have an asset at the end of the period to either sell or keep.
At this point cabbies may part- exchange on a newer vehicle, but this time at a much lower monthly cost due to the old taxi acting as significant part of the deposit. Many cabbies like this route as it gives them the security of a newer vehicle and the warranties that come with it. The cabbie’s monthly vehicle costs can drop to half of that compared to renting at this point and there are also renewed tax benefits in the form of Capital Allowance.
For some, keeping the vehicle for the whole duration of the licensing age limit period is their preferred business model. Historically lots of cabbies chose this method for diesel cabs, but there are now more reservations due to the unknown of new electric vehicle (EV) technology entering the trade. Costs involved maintaining batteries and parts such as eRads can leave cabbies with eye watering bills. That said, owning a taxi freehold reduces the monthly cost of running a taxi significantly to just insurance fees and general servicing totalling just a couple of hundred pounds per month.
If the taxi driver can put aside the money saved each month, they could have a nice lump sum at the end of the taxi’s life span to either reinvest in a new taxi or as a pension if they have plans to retire.
There’s also the option of buying a second-hand taxi which provides lower monthly costs and an asset. However, maintaining the vehicle will cost more as the vehicle ages.
There is no right or wrong answer when it comes to the taxi you drive. Over the next decade the durability of EV taxis will either be proven, or not, shaping how drivers approach the market for years to come.