It’s no surprise that ridesharing outfits like Lyft and Uber are disrupting the taxi business through lower pricing and technological advantages. However, it’s now clear that these app-based upstarts are also hitting taxis where it really hurts: the value of owning a taxi service. A New York Times analysis reveals that the prices of medallions, which are necessary to operate taxi fleets in numerous US cities, have plunged sharply in the past year. In Boston, Chicago and New York City, the price of a medallion has fallen between 17 to 20 percent. Ridesharing is affecting how often cities and owners can sell medallions, too. Philadelphia is cutting prices just to sell these items at all, and half of New York’s recent sales (a mere 10) were foreclosures — the former owners just couldn’t afford to stay involved.
The data doesn’t directly correlate to ride volumes, so it’s hard to know exactly how it translates to lost business. However, it provides a pretty good bellwether for the taxi industry as a whole. Would-be medallion buyers simply don’t see much worth in cabs, even in New York (where regulations limit what ridesharers can do); it’s hard to justify paying a six-digit sum to run a taxi service when your company could easily go bust. This isn’t to say that old-school hired transportation is going away for good, but it’s certainly not the safe bet that it used to be.
[Image credit: AP Photo/Mark Lennihan]
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Ridesharing apps are erasing the value of taxi services
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