By on December 4, 2014

NYC_taxicab_medallion

Transportation network companies like Lyft and Uber are making an impact on the United States livery market, particularly in cities where medallions are sold.

The New York Times reports the price of medallions in cities such as New York, Chicago, Boston and Philadelphia are falling as more people opt to use TNCs to get around, leading drivers to wonder why they should bother purchasing or leasing a medallion at all. In New York, the price for one of the 13,437 medallions available fell 17 percent between the spring of 2013 and October of this year, landing at $872,000. Philadelphia, meanwhile, can’t sell a single medallion for its asking price of $475,000, and aims to try again at $350,000.

Nailing down how things are proves to be difficult, due to the low number of sales/leases, or posting inaccurate numbers by omitting most sales. For New York, it’s the latter; they omit sales that go for $10,000-plus below the previous month’s average. Over in Chicago, weekly lease rates for medallion taxis are falling alongside the number of medallion sales in the Windy City, while others jump-ship to Uber or Lyft.

Drivers in New York also face a challenge from the new green “boro taxis” that serve fares in northern Manhattan and the boroughs surrounding Manhattan, with medallion owners having gone as far as the courtroom to rein in the green taxis, only for the ruling to fall in favor of the defendant.

Photo by Danielle Lupkin from NYC, United States ([1]) [CC BY-SA 2.0], via Wikimedia Commons

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86 Comments on “Lyft, Uber Et Al Impact US Medallion Market...”


  • avatar
    Luke42

    If anyone wants more background on taxi medallion system, I recommend listening to this Planet Money episode:
    http://www.npr.org/blogs/money/2011/11/29/142866785/the-tuesday-podcast-why-does-a-taxi-medallion-cost-1-million

    TL;DL : Everyone, except the people who could change it, thinks this system is a little ntuts. But, the economics and history are interesting.

  • avatar
    TurboX

    Technology enabling better service and lower costs to consumers. Now we need to see improvements on the Dealer exclusive distribution model as well which is antiquated and needs to die.

    I keep my hopes that one day I will be able to configure and buy a new car online directly from the manufacturer and have it delivered to my house. Overcoming the dealer lobby will be difficult but as more people demand this there will be political pressure to do what’s best for voters.

    Dealers would still exist to provide assistance to people who need extra help through the process or need to trade in an old car but I for most dealers will be a place to service cars.

    • 0 avatar
      RangerM

      While I share some of your sentiment, I don’t know why you would expect dealers (who are private businesses) to provide assistance–and by assistance I’m assuming you’re referring to test drives, features tours, promotional materials…….

      As a parallel example, companies like Best Buy can’t afford to provide a venue for you to shop TVs, and then go home and purchase the same products on the internet (tax free).

      Of course, I’m assuming you prefer to sit in or test drive a car before you buy it. If that is not the case, then you have no need for a car dealer.

      • 0 avatar
        TurboX

        Should have made it clear – I don’t expect dealers to provide free services, they should charge their overhead to people who need them.

        There are ways to avoid the “showrooming” practices which you describe and that I agree are not fair to the retailers. One of them is to charge people for a test drive. If you end up buying the car you get the cost credited back – but if you go back home and buy the car online you don’t get it back – that would be fair to everyone.

        • 0 avatar
          Landcrusher

          Yeah, not really. There are certainly ways to avoid anything. So what. The point is to make money doing it. The result will likely be something like laundry soap. Don’t need or want a laundry soap commercial? You pay anyway unless you buy a brand that doesn’t advertise.

          Do you think a car maker will go word of mouth?

        • 0 avatar
          slavuta

          I have really good solution for showrooming – Take away from the dealer price making. Manufacturer posts the price for the car and this is what you pay. then you will not need to showroom. Price will be same everywhere.

          • 0 avatar
            Pch101

            This is a good idea if your goal is to violate federal law re: price fixing and you’d like prices to increase.

            If you want consumers to save money, then this is definitely not the way to go.

          • 0 avatar
            Landcrusher

            Illegal in the US if you have resellers. Besides, there is usually a trade, so the price really isn’t the price.

          • 0 avatar
            danio3834

            “Price will be same everywhere.”

            Why is it desirable for everyone to get ripped off the same amount? Is making every consumer a loser a fair approach?

          • 0 avatar
            Bearadise

            Your idea is already on place. The manufacturers already put a price on every car, right there on the window sticker. Dealers don’t set that price and they would love it if everyone agreed to pay that price. But it’s the customers who aren’t cooperating with that concept.

            Besides, the people who say it should be like buying laundry detergent or a 12-pack of beer ignore the fact that the price of the same laundry detergent or beer can vary widely depending on whether you are buying it at Wal-Mart or a convenience store or Dollar General. And whether it is “on sale” or not when you go in to buy it.

      • 0 avatar
        redav

        Why wouldn’t they?

        They make their money from parts/service & used car sales, not new car sales. You can’t buy regular maintenance from direct from the factory, and the used car business model isn’t going away. For the most part, they sell you a new car with the intent that you come back for oil changes, maintenance, etc. Furthermore, if a dealership actually offers value, such as through seamlessly handling titling, installation of options/features, handling trade-ins, why wouldn’t consumers pay for that value? (They already do.)

        If factory direct sales were permitted, I don’t think it would dramatically change the auto business. It would provide more transparency to what dealers add–both in price and in services–and I think most consumers would still use dealers.

        • 0 avatar
          danio3834

          “They make their money from parts/service & used car sales, not new car sales”

          Car dealers still make a significant amount of money on new car sales. This isn’t inconsequential to them at all since paying for their glass palaces isn’t cheap. Many dealers now make up more than half their gross from fixed ops like service and parts, but sales revenue still makes up the other 40-50% on average.

      • 0 avatar
        S2k Chris

        Why couldn’t manufacturers set up Tesla-style “stores” where you can go and check out a car, take a test drive, etc, and not be badgered by some sales dude? You’re already paying for this infrastructure in the price of a new car today in the form of dealers; strip it down, remove the double-dip profit (manufacturer sells to dealer at profit, dealer sells to customer at profit) in the current supply chain, and there’s no reason why you shouldn’t be able to have “product test centers” that are minimally staffed and still pay, say, 5% less than under the current system since you’re removing some infrastructure and a layer of profit.

        I don’t expect Chevy and Hyundai and Toyota to go to this system, but I definitely could see the more boutique brands like Porshe and BMW, brands that want you to order a car, going to it.

        • 0 avatar
          danio3834

          The costs of retailing don’t disappear just because they are moved under different direct management. Manufacturers don’t want this cost because it’s significant, and retailing is low margin.

          • 0 avatar
            S2k Chris

            The entire costs do not, but if you shift to a direct sales model you can cut sales people, and like I said, you can cut the dealer profit out (currently there are two points at which profit is added, you could cut that to one with a direct sales model; heck, even if you cut the second profit point by half you are cutting 75% of the total profit while increasing it for the manufacturer). Costs don’t disappear, but they do go down.

          • 0 avatar
            danio3834

            The costs to the manufacturer increase, therefore there is little incentive for them to follow this model. As a consumer, you’re free to negotiate out any dealer profit at deal time. Competition between independent dealers assures it remains at a minimum anyway.

        • 0 avatar
          Pch101

          There is no “double dip” profit, but the opposite — franchise retailers are willing to accept lower margins than the OEMs would like.

          For the OEMs to be interested in this business, prices would have to increase. There is currently price competition at the retail level, which keeps prices down.

          • 0 avatar
            S2k Chris

            There absolutely is a double dip profit in the current system. GM sells to a dealer at cost + profit (Profit 1). Dealer sells to you at their cost + profit (profit 2).

            To use numers, GM sells to a dealer a car for $17.5k + $2500 profit, total price of $20k. dealer then marks that car up and sells it for $22k, let’s say $1k is overhead and $1k profit. Therefore total costs in the system are $18.5k (dealer + manufacturer) and total profits are $3500 (dealer + manufacturer).

            If they sold direct, the $1k of overhead doesn’t go away, but the second (dealer) profit of $1k could be cut down or eliminated. If it was cut in half, total manufacturer profit goes from $2500 to $3k, but overall price goes down $500 to the consumer.

            (don’t bicker about the numbers, I don’t know margins, etc, but the concept is correct)

          • 0 avatar
            Pch101

            You don’t get it at all.

            Dealers are willing to make less money than OEMs. OEMs would have to charge more in order to get the margins that they want (which is a primary reason why they tend to rely upon franchisees.)

            A typical dealer in the US makes pre-tax profit of 2%. That isn’t enough for an OEM.

          • 0 avatar
            S2k Chris

            “You don’t get it at all.

            Dealers are willing to make less money than OEMs. OEMs would have to charge more in order to get the margins that they want (which is a primary reason why they tend to rely upon franchisees.)”

            Who doesn’t get it? In this scenario, manufacturer profit goes UP.

            Yes, a dealer makes less profit on the transaction than the manufacturer, but if you GIVE THE MANUFACTURER THE ADDITIONAL PROFIT FROM THE DEALER how does that anger the manufacturer?

          • 0 avatar
            danio3834

            The return on the capital investment isn’t enough. Think of it this way, if you were to invest millions of your own dollars in today’s market, would you be happy with a 2% return?

          • 0 avatar
            S2k Chris

            “The return on the capital investment isn’t enough. Think of it this way, if you were to invest millions of your own dollars in today’s market, would you be happy with a 2% return?”

            2% incremental. If I thought controlling my supply chain would allow me to increase my number of xx% margin sales PLUS gain me 2% incremental, absolutely I would consider that investment.

          • 0 avatar
            Pch101

            For a company that aspires to making 5-8% pre-tax profit, 2% is not enough.

            Type “hurdle rate” into Google.

          • 0 avatar
            stuki

            @S2K Chris:

            The dealer is local, or in general more efficient at servicing costumers in his area.

            Even in purely online scenarios, there are not systematically lower prices from direct sellers like Dell, than from highly optimized third party dealers like Amazon and B&H.

            What the dealer franchise system really does, is hurt consumers indirectly, by preventing specialized niche experiences. Say, an “enthusiast” dealer selling sports cars, located at a racetrack where people can comparison shop before buying, and conceivably be kept captive by getting the cost of racing around for half an hour refunded if they buy a car.

            It also hurts consumers by preventing someone who figures he might just be darned good at selling the Evo he loves so much that he is willing to live on $15K/year to do so.

            Or by allowing current franchise holders to block new entrants to their markets in general.

            It really is just a special case of the general one that laws and restrictions are always bad, since flexibility and choice is always good.

            But I doubt you’ll win the argument by sinking to “their” level nonsensical pseudo econometrics.

          • 0 avatar
            ect

            Franchise dealers are every bit as profitable as OEMs, which is why they will spend so heavily to protect their favoured position.

            I doubt that OEMs would want to spend the capital to replace their existing dealer networks, but I can see how (as some do in Canada) they would want to have more control over their marketing by opening showrooms in strategic markets (say, Cadillac in Manhattan), and the ability to fil distribution gaps in important markets (as Chrysler tried to do some years ago in California).

            But, they’re prohibited from doing so by state laws that dealer associations have bought and paid for. Which is bad for the consumer.

          • 0 avatar
            Pch101

            Last I checked, 2% was below 4-8%.

            Some folks need to work on their math skills. Again, I would encourage those people to type “hurdle rate” into Google.

          • 0 avatar
            S2k Chris

            ” Last I checked, 2% was below 4-8%.

            Some folks need to work on their math skills. Again, I would encourage those people to type “hurdle rate” into Google.”

            Got to love the people who took one business class or heard one buzzword once, and look at the world myopically through that tiny lense. No understanding or ability to step outside that little world and understand things from a broader perspective or that something that doesn’t necessarily make sense in one metric makes a world of sense in other metrics, or strategically, or layered onto other strategies, or whatever. That’s what you’re doing here, Pch.

          • 0 avatar
            ect

            My math skills are fine. What’s flawed is your understanding of financial management.

            Companies don’t make investment decisions on gross margin or return on sales. Nor is the hurdle rate based on return on sales, as you imply.

            Simply put, the hurdle rate either is or is based on the company’s Weighted Average Cost of Capital (equity and debt). You want an investment approved, it has to beat the WACC.

            Nor is return on sales used by companies as a basic measure of profitability. Companies, and the Street, focus on return on equity (or a proxy therefor).

            In all my corporate career, I never saw anyone bonused on gross margin or return on sales. I, and everyone I worked with or knew in senior management roles, were bonused on ROE (or some proxy therefor). Which makes sense – it’s the return the investors get on their money that matters most.

            In the auto sector, a quick bit of research indicates that GM’s ROE is running around 7-8%, Ford’s around 26%. I understand that Ford is very highly leveraged (perhaps due to the family’s need to maintain voting control). GM may be underleveraged, as a result of having its debt wiped away by Chapter 11.

            Looking at 8 publicly-traded auto dealership companies, they have ROE’s ranging from 9.6% (Group 1) to 25.6% (Asbury). So, they seem to be every bit as profitable as the OEMs.

          • 0 avatar
            Pch101

            Thanks for the bundle of confusion and inaccuracies. Every time that you post this stuff, my faith in your alleged business acumen declines.

            Per NADA, pre-tax income of a typical dealership is 2.2%. That isn’t gross margin, but net income before tax. Not enough money for an OEM.

            A dealership in the US produces an average pre-tax income of about $1 million. That’s great for the guy on your block, but peanuts to a car company that has better places to invest its resources.

            Mercedes is shuttering company-owned stores in Germany for these very reasons — returns are too low and the resources could be better allocated to areas that are more lucrative or more closely aligned to Daimler’s competitive advantages. But perhaps you know more about the auto business than does Dieter Zetsche and you should talk him out of it.

          • 0 avatar
            ect

            You like to make sweeping accusations, while ignoring substantive data and presenting none of your own.

            Again, you want to presume that return on sales is a meaningful basis for company evaluation and investment decisions. It absolutely is not.

            The market judges businesses on the return on equity. Investment decisions are based on IRRs in excess of the company’s hurdle rate, to boost ROE.

            On this measure, I see that NADA cites average dealership ROE of 29% (you seem to have forgotten to mention this). By any comparison, this is extremely high – much higher than that of the OEMs (remember, I actually provide data to support my observations).

            And the NADA numbers are almost certainly understated, at least for owner-operated dealerships. I have led the acquisition of a number of private companies. In due diligence, the first thing we had to do was to “normalize” the target’s financial statements, because the owner invariably funded family members and personal/lifestyle expense through the business, to reduce his tax bill. So, we had to back all this stuff out to get a picture of the real financial position of the business. One can bet that auto dealers follow the same practices.

            But you completely ignore the larger question, which is that, in a free market, automotive OEMs should have the right to sell their vehicles at retail. Whether they would choose to or not, or to what extent, is irrelevant.

            That they don’t is because the dealership lobby buys legislation to keep them out of the dealership business. This makes the dealerships very profitable, as the source you led me to proves, but it’s bad for consumers.

          • 0 avatar
            ect

            S2k Chris, I agree with your conclusion, but suggest that you misread Pch’s mistake.

            “The return on the capital investment isn’t enough. Think of it this way, if you were to invest millions of your own dollars in today’s market, would you be happy with a 2% return?”

            He is actually confusing 2 different measures. The 2% he refers to is what NADA reports as the average dealership’s return on sales, but he erroneously presents it as if it were ROI – which it certainly is not (and which goes to your earlier comment).

            NADA also reports that the average dealership earns a return on equity of 29%.

            So, the real question is, if (to borrow your words) you thought controlling your supply chain would allow you to increase your number of xx% margin sales PLUS gain you 29% incremental ROI, would you do it?

            The answer seems obvious, doesn’t it?

          • 0 avatar
            Pch101

            I’m not going to bother reading that, as it shouldn’t take much talent to know that automakers aspire to make more than 2.2%.

            You don’t need to believe me. Automakers are publicly traded, so they publish these things called “financial statements” that allow us to compare their results to the low returns produced by dealers.

            In any case, most businesses that produce goods don’t bother with retailing them themselves. Why various yahoos on the interwebs are convinced that automakers are supposed to be different, I don’t know.

          • 0 avatar
            ect

            “I’m not going to bother reading that”

            That tells us everything we need to know about your self-proclaimed expertise and openness to new information.

            By the way, how’s that search for an A3 with a stick shift coming?

          • 0 avatar
            Pch101

            “That tells us everything we need to know about your self-proclaimed expertise and openness to new information.”

            I’m open to information from credible sources, not uninformed bilge as people like you and BAFO produce.

            I can’t be expected to take you seriously if you can’t even read properly. Per NADA:

            “expect net profitability before tax at dealerships to remain unchanged at 2.2 percent in 2014.”

            Net profit before tax. I’m starting to think that you don’t even know what that is.

          • 0 avatar
            ect

            You’re still talking about return on sales. What you don’t want to learn is that businesses don’t make investment decisions based that. They do it based on ROI on the investment, which tracks to return on equity. Which is the measure that corporate boards and the Street follow.

            On ROE, NADA says the average dealership returns 29%, which is far above the return that OEMs get.

            Credibility?

            Well, I’ve witten and presented corporate investment proposals, and as a C-suite executive been part of the approval team.

            You haven’t.

            I’ve led more than 70 M&A transactions, in 32 countries.

            You haven’t.

            I’m quite prepared to acknowledge mistakes, and what I don’t know.

            You can’t ever bring yourself to do either.

            I know what I’m talking about.

            You don’t.

            On than note, I’m stepping out of this conversation

      • 0 avatar
        djoelt1

        Maybe the test drive model changes so the dealer is not needed. In large metro areas, car makers provide a variety of cars to a business and pay its overhead to keep those cars on a lot where they can be test driven. Maybe some makers charge $20 per car for test drives. Maybe these lots can be at airports or even run by car rental companies.

        • 0 avatar
          Pch101

          Automakers use franchisees because the franchisees help them.

          For a direct sales model to work, we would all need to pay enough to make it profitable for the manufacturers. And that means higher prices for the consumer.

          Since we don’t want to pay more, there are good reasons to keep the dealership network.

    • 0 avatar

      You can already do that through Truecar website.

  • avatar
    jdash1972

    The whole idea of the city selling medallions is so they can get their cut. The city decides how many taxis can operate and sells that right to a cab company. It’s an old system and a source of revenue for the city, it’s a tax and the city provides no service in return for this money. Uber and Lyft and cheaper, cleaner, the cars are usually better, the service is better and the whole thing is more efficient. It’s all done with an app on your phone and money is never exchanged between rider and can driver. More power to them, F New York City and their overpriced medallions.

    • 0 avatar
      jmo

      “The whole idea of the city selling medallions is so they can get their cut.”

      If that were the case they would auction off the right to operate a cab every year. Many of these medallions were sold for $25 back in the 30s and all the appreciation has accrued to the owner not the city.

    • 0 avatar
      Landcrusher

      The cities do offer something – protection. Now they are failing to do so. It’s unfair to the medallion owners who should sue and win. They likely will not get their money back, but there is a lesson in that – don’t bet on the government fulfilling a deal.

      I did once. They cheated. I lost over $100,000 while a bunch of them made up a fake problem about fat cats and solved it by taxing the fat cats in a way they could simply avoid while all the working types got screwed with taxes and regulations and watched their assets crumble.

  • avatar
    Xeranar

    I’ve never defended the medallion system wholesale because it needs to be fixed since the medallions are so few that they’re investment vehicles rather than legitimate operator licenses as they should be. That being said Uber/Lyft are wholly unregulated entities that operate outside the laws in most cases. Getting excited that ‘free market’ competition is using a form of anti-competitive price wars (something you should hate if you really do believe in free markets…) as a way to devalue taxis is a bit premature.

    Given time the new equilibrium will be reached never mind that we’re actually just bifurcating the system. The poor will use taxis, the rich will use uber. The discussion on subjective terms of ‘cleanliness’ and such are largely irrelevant within the economics of the argument. The strength of Uber lies in convenience and pricing and when the latter is being exploited by a company seeking to break the back of their regulated opponents you have to question the validity of their argument as a worthy competitor.

  • avatar
    Kendahl

    A medallion is just a business license. The high price means that the supply has been artificially restricted to well below demand. Starting long ago, numbers should have been increased year by year to keep the price consistent with inflation. Driving a taxi isn’t a high paying job. I don’t see how anyone can make a profit doing it with such a high cost of entry.

    • 0 avatar
      Pch101

      The medallion system caps the number of potential drivers, which increases fares to a level high enough for (some) people to make a living driving a cab.

      • 0 avatar
        ihatetrees

        So if we had a similar medallion system for fast food restaurants, their employees’ pay would increase?
        Sure, some employees’ pay would increase, some others would decrease to zero (via business closure). Customers would take their money elsewhere (sit down restaurants, grocery stores).

        Medallions criminalize competition. Not seen are those not served because rides are not available due to price and/or volume restrictions. Uber serves that market – a market where taxi firms must fail because they cannot raise prices and/or increase fleet size on demand.

  • avatar
    kosmo

    The idea that somebody buys a medallion, then parcels out the right to use the medallion at a price, while not actually doing anything, seems ludicrous.

    Though I’m sure there are plenty of similar examples of this, it’s a system that is clearly beginning to break down, and the consumer will be better off for it.

    Though a small part of me feels a bit bad for somebody that bought a bunch of these things a million a pop, and may now see their value erode quickly by 505 or more.

    • 0 avatar
      sproc

      Why would you feel bad? At this point a medallion is a speculative investment in the guise of a business license.

    • 0 avatar
      S2k Chris

      “The idea that somebody buys a medallion, then parcels out the right to use the medallion at a price, while not actually doing anything, seems ludicrous.”

      Why? He who provides the capital reaps the rewards. Do you expect the guy who buys a McD’s franchise to make all the frys? The guy who angel invests in a tech company to write all the code? Sam Walton to stock all the shelves at Wally World? Welcome to how capitalism works.

  • avatar
    Arthur Dailey

    Like Jerry Seinfeld said about the Post Office “they wonder why they aren’t successful using a business model created in the 18th century”.

    Medallions are generally owned by non-driving investors. Often they hold multiple medallions. The drivers make little money because they have to rent the use of the medallion/vehicle.

    As for dealerships, also an outmoded model based on the manufacturers wanting to maximize output while limiting risk. The dealer took the risk by stocking cars (number and type dictated by the manufacturer). In Japan cars traditionally were sold door to door by sales people working directly for the manufacturer.

    Instant electronic communication and the plethora of information available have made many old business models largely obsolete. These will eventually probably include travel agents and real estate sates.

  • avatar
    Richard Chen

    There was an interesting (and long!) comment about the long-term future of Uber and skepticism regaring Uber’s multibiliion dollar valuation:

    http://talkingpointsmemo.com/edblog/understanding-the-economics-of-uber

  • avatar
    CoreyDL

    Yep, sounds like an old-timey government system in need of revamp as it continues to be ineffective and inefficient. Designed in a different era, while everyone else has moved on.

    Throw it in with the aforementioned USPS, as well as Social Security.

  • avatar
    vvk

    I don’t know why people ride taxis in the US. They are so damn expensive. A ride is like $30, which is something like 30 times more expensive than the subway.

    Every other place I have been to, except the Caribbean, taxi is only 3-4 times more expensive than public transport. Which means if you are going with family or friends, it could be actually cheaper to get a taxi.

    I have used a taxi maybe three times in the US. All were dirty, broken down and exceedingly expensive.

    • 0 avatar
      CoreyDL

      Foreign people who do not understand the United States should not make such comments, as they are ignorant. Most cities do NOT have a subway. Most cities don’t even have great bus service. And if they do have great bus service, better pray you don’t need to leave the inner-city area.

      Oh and by the way, cities in the US are often large and expansive.

      Your $30 and 20 minute taxi ride is more appealing than a $3.50 1h45min bus ride.

      • 0 avatar
        vvk

        > Foreign people who do not understand the United States

        First of all, I am not foreign. Second, the article talks about NYC and Philadelphia, both of which have excellent subway and bus public transport.

        • 0 avatar
          CoreyDL

          Yes, well your assertion here:

          “I don’t know why people ride taxis in the US.”

          Sounds just like an ignorant foreign person. People take taxis in cities where there is not “excellent subway and bus public transport.” This is MOST cities. You didn’t say “NYC and Philly have excellent public transport, and I don’t see why people take taxis there.”

          So, for you to not understand why people take taxis in the US, you must not have much knowledge of the United States.

          Ergo, foreigner.

        • 0 avatar
          bball40dtw

          No public bus transport is excellent.

    • 0 avatar
      Dan

      “I don’t know why people ride taxis in the US. They are so damn expensive. A ride is like $30, which is something like 30 times more expensive than the subway.”

      If I had to guess, I would say it’s because most places don’t have a subway.

      • 0 avatar
        TMA1

        And if they do have a subway, you better get there before it closes at midnight (at least where I live).

        Subways in the US are a joke though. Even the cities that have them, they are not comprehensive enough. New York is about as close as you get. The second largest system, in DC, is designed to get people to and from work. It’s not a general transportation system.

        And Corey is correct about the buses. The first 6 months I lived in DC, I didn’t have a car. Going out to shop for necessities was an all-night endeavor.

    • 0 avatar
      Landcrusher

      I don’t know why people ride taxis in most other parts of the world (actually I do, but it sounded like a good way to start).

      The fares are unregulated and the likelihood you will get robbed or assaulted are very high. Also, some countries hold the rider responsible for accidents because he hired the cab and is thus the money in the operation. They will actually throw you in jail because the driver hit a kid. You are advised to let the kid bleed and flee the seen lest you join his misery.

      It’s all understandable because in most of the world people are too stupid to recognize the success of the U.S. and emulate it. Rather, they somehow fall for bad ideas parading as better ones time after time.

      Yes, taxis here are over priced and over regulated and over taxed. London seems to do it much better. Some third world countries also do better. However, lots of places do it worse.

      Most people in most places here rent a car. It’s much more efficient than a subway outside of dense cities areas. This is also regulated and taxed and will get replaced as soon as someone figures out how to avoid those inefficiencies.

      • 0 avatar
        highdesertcat

        LC, if you’ve ever been to Las Vegas, NV, you would find a lot of taxis waiting at McCarran, but that most hotels, motels and Casinos provide their own bus service to/from the airport, roughly every thirty minutes.

        During a convention I attended in Las Vegas, NV, the Rio sent a bus to pick us all up at the airport, and then provided a Van to drive us all from the hotel to the Convention center. Then picked us up at the end of each day. All we had to do was call the front desk. No charge.

        And no d!cking around with Cabbies and their outrageous charges, like $1.75 for 1/10th of a mile.

        • 0 avatar
          Landcrusher

          Yep, there are always people looking for ways to avoid the inefficiencies created by regulations.

          • 0 avatar
            highdesertcat

            The time we went to Las Vegas in Sept 1985, my wife and I took a taxi from McCarran to the little wedding chapel, just on the other s!de of the freeway from the airport.

            Cost us $55 and we gave the Cabby a $10 tip to get us there fast.

            We had little choice. Our flight out of El Paso, TX, had been delayed for hours (coming in to El Paso) and the wedding ceremony for our friends was scheduled to start in 20 minutes after we arrived in LV.

            No time to check in at the Hotel (Circus-Circus) first. We showed up the the Chapel with my wife’s big roll-on suitcase and my 30-gal duffel.

            Threw both pieces of luggage in the little alcove by the front door and were surprised they were still there after the ceremony. I guess it happens all the time, there.

            But we made it!

            Afterwards we hitched a ride to the reception hall, with our luggage strapped to the top of someone’s sedan trunk lid, with bungee cords.

            Didn’t even know the people we hitched a ride with. But they were in the wedding party, like us. And they offered.

            A memorable event, saved in photographs for posterity and eternity by a helpful LV Cabby in a Crown Vic, taking us off-road from the airport to get us to Las Vegas Blvd in time for the wedding.

            That was one harsh and jolting ride. Lost count of all the times the Crown Vic bottomed out in the dirt. But we got there.

            From that time on we opted to ride the hotel shuttle.

      • 0 avatar
        Arthur Dailey

        Landcrusher,
        did you mean to print that in ‘sarcastica’ or were you merely arguing against yourself?

        Many other nations and/or cities have safe, efficient, relatively clean and reasonably priced taxis. As you mentioned, London is a fine example.

        As for the “success of the US and emulating it”. Would not ‘the failure of many US cities and their clueless politicians’ have been a better way to phrase it? The prime example being Los Angeles selling off and allowing the dismantling its mass transit system post WWII.

        Time and again evidence proves that rapid mass transit is superior to the use of private vehicles for moving people around an urban environment. It also improves the livability of a city.

        As for car rentals, I am now a member of a car sharing organization. No need to buy ‘insurance’ from the rental agency. And the cost of gas is included. Have since joined up my children. Not having to worry about insurance for a male driver under the age of 25 in the province of Ontario represents a savings of about $5k annually, as opposed to privately insuring him as the ‘primary’ driver.

        • 0 avatar
          Landcrusher

          No.

          Most of the world is not London and first world capitals and US cities. Most of the world is third world and corrupt. Perhaps you missed the context. I was responding to vvk’s shot at the U.S. taxi system. It sounded to me like the typical shot at the U.S. where the speaker points out something bad without regard to how much better it is than most of the world.

          I hate to assume, but have you taken a cab in Venezuala or Azerbaijan? Syria perhaps?

          LA is so terrible that since it dismantled that awesome transit system it has become a pit like Lagos? No? That’s not to say it was a good decision, but to say when you pick on LA versus the rest of the world you should keep some perspective.

          Personally, I like light rail, but most modern implementations are terrible. We have terrible mass transit in Houston, but the city is great. Given the costs, I would say that mass transit projects might be best judged versus the alternatives rather than by how “nice” they are or how “livable” they make a city.

          As for car share, if it works for you great. I prefer to own at home and rent on vacation. I never needed rental insurance, so I have no idea what that is about. I drove a forklift at 7 and a school bus at 17. The world has changed since then though.

          • 0 avatar
            Arthur Dailey

            Certainly there is no need for ‘bashing’. However we do need to discern between 1st world nations and 3rd world nations that cannot even provide the majority of their citizens with clean water and sanitation.

            As for rental, having rented in Canada, the USA, the Caribbean and Europe the rental agent always tries to sell insurance coverage/riders to cover any deductibles, etc. I have a rider on my private insurance coverage and use a credit card that provides additional coverage for rental but these only cover passenger cars, not vans or trucks.

            Car sharing works great in many instances. For example rather than having a child take one of our cars away to university and be classified as the primary driver, they instead use a car share service. This covers all their insurance costs and provides them with an insurance record.

          • 0 avatar
            Landcrusher

            Arthur,
            I am now a bit lost on your message here. It seems to me that the word “most” is very clear. Had I meant ” most of the first world” I would have said that.

            Also, let’s not make any more mistakes. The only nations not capable of adequate food and water systems are those under the thumbs of military dominance. And let’s be clear, I am not talking about US military dominance (by far the most benign in the history of the world) but rather the true military dominance of aggressive states and pseudo states.

            The rest of the world continuously chooses failure. They choose it. It is undeniable and logically inescapable. The road map is clear and available to all. Private property, fair courts, and civil rights work. The rest is a slippery slope. You grab your guns or take your chances with despots. It’s a choice. Sorry about all the supposedly well intentioned first worlders trying to hold you back with silly political tripe, but feel free to shoot them when they come for a “conference” or deliver ammo to the oppressors. Trust me, it’s a fair reaction. God will not reward you for killing the innocent, but being omniscient will certainly understand spilling the blood of despot enablers.

            Lastly, I am still happy you like your car sharing thing. Vive la difference. .

          • 0 avatar
            vvk

            > vvk’s shot at the U.S. taxi system. It sounded to me like the typical shot at the U.S.

            What? In no way was my statement of disgust with the US taxi a shot at the US, which I live in and love dearly.

            I have not been to the third world but I have been to first and second. Actually, wait, is Israel considered third world? Because their taxis are cheap, clean and efficient, too.

          • 0 avatar
            Landcrusher

            Israel is a first world nation, IMO. Haven’t been there yet though.

            Appreciate your clarification, but intentions aside, the same formula was followed as usual by the native and foreign critics.

            I’m not especially proud of our taxi system either. Most places here it’s high on taxes and regulation while extremely low on quality.

    • 0 avatar
      S2k Chris

      You are correct that taxis are very expensive as a commuting option, and only the very rich commute via taxi (or private driver). For most people, they COMMUTE via car, bus, subway, train, whatever, but use taxis for less-frequent needs like when intoxicated, when parking is difficult or $$$, when they have luggage or stuff to haul, when going somewhere off the subway/bus/train line, etc.

    • 0 avatar
      petezeiss

      With a taxi you get to enjoy a steel cage between you and the rest of the city. Always a good thing.

  • avatar
    jacob_coulter

    Sounds like good news to me. Let the market decide the right amount of taxis.

    Have central planners ever done a good job making these sorts of decision?

    Whenever you get government bureaucrats involved in this sort of planning, it ends up being who pays the politicians the most.

    All the controversy regarding Uber and Lyft was never about public safety, it was about a Cartel protecting their monopoly.

    • 0 avatar
      highdesertcat

      Good points all, but that’s why Uber, Lyft and many other individuals are doing a booming business giving people rides.

      What is woefully overlooked in this article is the enormous number of people who don’t have a taxi medallion but still give others rides, for compensation.

      This exploded ever since cell phones became an indispensable device.

      My brother in Manhattan, NY, tells me that numerous people he knows have called him to ask for a ride, and when he can, he does so. Ditto his wife vis-a-vis her friends.

      And when they can’t, the callers have to find another way, or another friend, to get where they are going. It is an understood thing in big cities. Only as a last resort do you call a taxi cab. Many travelers just get a rental to take care of their transportation needs.

      That’s why Uber and Lyft are so popular. Strangers making themselves available to give other strangers a ride. Friends can’t always do that. They may have lives of their own.

      Just this week, my assistant, Nguyen, asked me to give him a ride to the El Paso, TX, airport using his truck. He could have taken the shuttle with door to door service, but asked a friend first.

      And when he returns, I’ll drive his truck again and pick him up at the airport and he will make it all worth my while, although he doesn’t have to.

      • 0 avatar
        ihatetrees

        What’s even more odd (to me anyway) is Airbnb. You let others use your house / apartment for a fee. It can be quite lucrative for those in underserved hotel markets like NYC or Paris.

        A trust network of over 500K people rate one another as guests and/or hosts. A great podcast about the trust economy by an Airbnb founder is here:
        http://www.econtalk.org/archives/2014/09/nathan_blecharc.html

        • 0 avatar
          highdesertcat

          Yup, that’s who my brother is with, AirBnB.

          He’s never had a bad client. All pre-screened. Never any damage. Had many repeat clients. Some even from Canada (sno-birds). They leave their RVs parked in the street and driveway and use the house for a week (or more). Walk everywhere they go in a group.

          $4K a seven-day week is cheap! Fully furnished 3 br, 2bth, spa&Jacuzzi, w/gar, all utilities, firewood for fireplace (in winter), easy access to everything imaginable, golf courses, gyms, Del Taco, Wal-Mart, you name it, it’s within strolling distance.

          Last guests were some golf team from USC – from the looks of the place afterward, they slept everywhere; in sleeping bags on the floor in the LR, Den, Dining room – must have been at least eight of them, probably more. Left one ratty old holy sleeping bag behind in the trash.

          Furniture neatly was stacked against the walls to make room for sleeping bags. Cleaning ladies made a killing on aluminum beer and soda cans left in plastic trash bags.

  • avatar
    BR1950

    The face of Uber is the face of criminal oligarchy. It’s that simple. This private corporation has 24 BILLION and yet it refuses to pay same dues and taxes that small transportation businesses are forced to pay. How is that fair ?
    I have long stopped using this tax-evading privatization shark (read: uber).
    I witnessed privatization results in Latin America – it wasn’t pretty.
    And like with Uber, all privatizes tried to lie and deceive you into believing
    that they are the next “big thing” and are “better than a sliced bread”.
    All lies…. All they care about are their own fat pockets.
    I now read people complaining almost daily on the Internet about being charged
    hundreds of dollars by Uber for short distance rides.
    Sad that we have corporations such as Uber in existence today.
    I am not against technology.
    But technology must be ethical, must be fair, must be lawful.
    Uber is none of those. Just another privatization shark feeding off general public.

  • avatar
    Beachbunny

    If taxis weren’t so damn expensive and difficult to procure when you needed one, services like Uber wouldn’t have any business.

    But it’s not that way, which is why Uber exists and is enjoying the hype.

    Try catching a cab in NYC at 7pm on a rainy Thursday night. Good luck.

  • avatar
    Landcrusher

    All you guys with your financial terms are, as usual, letting the vocabulary and a bunch of MBA nonsense get in the way of the reality.

    A whole lot would have to change for there to be a real hybrid system where you could buy direct while your neighbor buys from a dealer and pays more. You might as well wait for all the O2 in your room to group in one corner. It could happen, but making it happen and keeping it that way? Don’t hold your breath. I will defend this by letting you point out a similar system that is stable and then by pointing out the fatal flaw in your example – ad nauseum.

    So, you could have factory owned stores by buying back the dealerships. This has been done in Europe. I know a likely billionaire result of this who now manufactures planes. You know what he did? He hired dealers for the planes everywhere he could.

    Would your dealership experience change at factory stores? Well, not really. Maybe it would be a little more professional, but most all the same people would be there doing all the same jobs and costing the same. Likely, if you are a savvy buyer, your price would go up rather than down. Knowledge would not be empowering. Think Apple Store with no Amazon for better prices, but with dealership people rather than naive youth.

    People often fall into traps of thinking you can eliminate a problem through a rules change without really seeing how it’s really gonna turn out.

    No, dealers should not be mandated by law. No, you won’t get the advantages out of that you think you will unless you think that some marginal improvements will happen over time as different players try different things. Yes, you can sit in your pajamas and dream, but that won’t change anything.

    Lastly, if any of the big three really wanted to get rid of dealers, Michigan would repeal the mandate next session. This has been true since there was a big three.

    • 0 avatar
      ect

      I plead guilty to having an MBA, and a JD. But I do like to think I focus on reality, not vocabulary. From which I’ll offer a personal experience.

      In the Toronto area, MB has a mix of mostly company stores and some independent dealerships. We bought our most recent car, in 2013, from one of the independent dealerships.

      The experience wasn’t orgasmic, but it wasn’t at all bad, and frankly was about the best I’ve ever had. We shopped both a corporate store and the dealer. It was very clear that the dealer had figured out what the corporate stores offered (price and customer experience), and set that as a standard he had to beat. Which he did, handsomely.

      A friend of mine who is a repeat MB buyer buys from another dealer, and has had the same experience.

      So, it seems that the very existence of corporate stores lights a fire under the dealers to do better. Which can only be good for the consumer.

      I mentioned in another post that I don’t believe that OEMs will want to entirely replace their dealer networks. But the possibility that they might open corporate stores, based on my experience, seems to galvanize the dealers to up their game. How can that be bad?

      • 0 avatar
        Landcrusher

        Of course the corporate shop is higher. If they were not. No one would buy a dealership. That’s not what the anti dealer crowd thinks will happen. They want to bypass the dealers and get a direct, low price because they don’t need the dealer. I really don’t think most US dealers would play along with a hybrid environment because most the manufacturers play games and there is not a lot of trust.

        In aviation, you might get a slightly more professional treatment with less chance of being jerked around by the manufacturer but buying direct doesn’t cost less. To the contrary. The negotiations are actually tougher buying direct.

        Having a sort of flagship store is also different from taking all the dealerships. As soon as you do that, your sales force is likely to start the same games the dealers do now.

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