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Why cheaper taxi vehicles doesn’t actually mean bigger profit margins for drivers



The possibility of everyday cars being used as taxis in the bustling cities around the UK has long sparked intense discussions within the taxi industry. The existing regulations for Hackney Carriage taxis in some of the UK’s most densely populated regions demand certain fitness conditions that include wheelchair accessibility and inbuilt enhanced U-turn steering capability.


However, in an attempt to combat spiralling costs, some within the trade have begun to explore alternative options, including the use of cheaper, more readily available and produced vehicles.


BRAND AND HIGH QUALITY VERSUS CHEAP AND INDISTINGUISHABLE


The iconic features included on a purpose-built taxi have long worked in tandem with the brand and image of the taxi industry. It takes years, if not a lifetime, to build an instantly recognisable brand in any industry, and the black taxi has achieved that with aplomb. Features included in the purpose-built design serve as a distinguishable quality of the iconic London black cab. For example, wheelchair access helps make a city instantly accessible to all and standard five to six seat spaces can transfer most families in a safe and comfortable fashion.


Like most things, added features and quality usually mean higher operating cost. A new Toyota Prius cash price currently starts at around £25,000, whereas a purpose-built LEVC taxi starts around £63,000. At first glance, you might assume drivers would all push for the cheaper vehicle and pocket the near £40,000 over the period of repayment on the vehicles listed.

However, the driver will likely earn the SAME profits despite the saving on the vehicle. Why? Because if the cost of the vehicle significantly decreases, that would subsequently lead to a decrease in the fares paid by passengers. This would likely result in drivers seeing a reduced return for operating an inferior and cheaper vehicle. As such, many drivers express reservations about compromising the quality and character of the traditional Hackney carriage taxis.


Importantly, the introduction of saloon cars as taxis could further blur the line between traditional taxis and private hire vehicles (PHVs), as well as ride-sharing services.

The UK taxi industry has been keen on maintaining a two-tier licensing system, distinguishing between Hackney Carriages and PHVs. The identity and distinctiveness of taxis plays an important part keeping that distinction.

Making taxis cheaper for passengers could in theory raise demand, but would long-term customers downgrade vehicles for a smaller more intimate offering? Would the public be able to differentiate between a sea of Toyota Prius PHVs and a taxi using the same vehicle model? Why risk it, when demand for purpose-built taxi services remains high and there is little in the way of financial reward to the driver?

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