Why taxi license is not taking off
How bad is the local economy?
One can track through many leading and lagging economic indicators but perhaps it is easier to have a ride chat with a local taxi driver.
It is quite clear the taxi business is still not very good eight months after the border reopening.
Simple mathematics. The influx of mainlanders is visible, but not at the level we would have expected. Living in Causeway Bay for more than three years, I can testify Causeway Bay is mostly not very vibrant, although I still get requests from mainland tourists for road direction.
Then of course, some 200,000 Hong Kong people left the city for good, although more mainlanders are expected to arrive through the talent program. Taxi drivers can tell you how they are affected.
To put in another perspective, I can also conclude the city of Toronto is probably more robust. Toronto, where I have been spending three weeks, has the world’s highest number of tower cranes of 238 as of April 2023.
Hong Kong’s economic health can also be reflected in the taxi license price, which has been falling a consecutive six months.
According to the Hong Kong taxi exchange, the latest red taxi license is HK$3.75 million, down nine per cent from 4.12 million last month.
License of the green taxi, which operates in the New Territories, is HK$3.11 million, down 5.5 per cent month-to-month.
To be fair, local taxi license has staged a strong rebound in January in anticipation of reopening but it went freefall in the subsequent months.
In the first place, there are more sellers than buyers in the market, especially when the interest rate keeps going up this year, luring away taxi license investors as they opt for fixed deposits with higher yield.
Taxi driver is also one factor. The average driver age is 60, which probably put Hong Kong as the highest in the world in terms of the driver age.
Not many youngsters would want to become a taxi driver. Even if they like driving, they would probably go for Uber, which is still illegal in Hong Kong after nine years.
For years, taxi license has enjoyed a good ride as the number of taxi licenses has been capped at 18,163 since 2016, in what many regard as the taxi hegemony.
But more recently, the changing demographics and economics are hurting, even though taxi fare has been going up at an inflation-beating rate. Good luck for those who own dozens of taxi licenses.
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