The traditional taxi business is plummeting, and it’s not because of ridesharing.
Uber, Lyft and other ridesharing apps are enjoying what some would call “overnight success” for a good reason. They’ve found a way to avoid those burdensome taxi regulations to make the industry nicer for everyone.
Investors can now get into the business without having to take another line of credit to pay for medallions and cars. A medallion costs more than $200,000, and a brand new vehicle goes for anywhere between $10,000 and $20,000. That explains why taxi companies own most yellow cabs.
The industry has also placed many requirements around the taxi business. Besides the paint job, you also have to install a panic button, taxi meter, card reader and a radio. When you add that to licenses, insurance, maintenance, and other sundry expenses, it’s clear that running a traditional taxi business is not cheap.
Joining Uber, on the other hand, is as simple as passing an inspection and downloading an app. And that makes it extremely hard for traditional taxis to compete with the free market. Therefore, it safe to say the taxi industry is drowning itself with regulations.