Is the worst over for Singapore's taxi businesses?

The average mileage travelled by two-shift taxis has been growing again for five months.

OCBC Investment Research observed that in the recent few months up to January 2018, improving taxi operating indicators are pointing to a more stabilised environment.

On a per trip basis, one-shift taxis’ average mileage in January 2018 reached 10.6 km, up 6% from 10 km in January 2017. Industry average engaged mileage is equivalent to 180.2 km, slightly higher by 0.1% than 180 km in January 2017. This marked three consecutive months of YoY growth.

Meanwhile, two-shift taxis’ average mileage per trip in January reached 10.3, up also by 9.6% from 9.4 km in January 2017. Industry average engaged mileage is equivalent to 257.5 km, 0.7% higher than 255.68 km in January 2017. This reflected five consecutive months of YoY growth.

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OCBC Investment Research analyst Eugene Chua noted that this is positive as it indicates more stabilised taxi drivers’ earnings with higher mileage driven. “In addition, we also noted that MoM growth in rental cars was more subdued whilst the rate of decline in taxi fleet size slowed down for the more significant taxi operators in Singapore,” he added.

The growth of the rental car population dipped below 0 in January 2018, whilst the growth of ComfortDelGro cabs improved from below -3% in December to around -1.5% in January. The growth of Trans-Cabs’ population improved from -1.3% to nearly 0 in the same time period.

"In essence, this trend points to a more stabilised environment for the taxis and private-hire car (PHC) services,” Chua said.

Not too long ago in 2017, the “disruption” caused by ride-hailing services Uber and Grab drove a hard blow to CDG’s taxi fleet and profits. However, recent developments have also pointed to taxi businesses’ attempt to save themselves from the disruption, as exemplified by the proposed joint venture (JV) between CDG and Uber, which is still undergoing regulatory review. 

Moreover, Chua added, "Given how fast the industry has grown over the past few years, the government is also now studying how to license PHC services to have sufficient regulatory oversight, which in our view, helps further level the playing field between traditional taxi business and PHC services."