Rising fleet costs could see taxi drivers turning over £26,000 a year just to break even
London's iconic black cab drivers could be facing a steep increase in operating costs, with projections indicating that the expense of running a rental taxi full-time could surpass £26,000 in 2024.
This financial strain comes amid a broader discussion about the sustainability of the vehicle used in the capital’s taxi industry.
The LEVC TX taxi, known for its eco-friendly design, has become a significant investment for many drivers. The average weekly rental cost for these vehicles currently sits around £350, with concerns that it may rise to around £400 per week in 2024. Fleet owners have been criticised by some drivers for allegedly inflating rental prices, although owners quite rightly cite rising interest, insurance, warranty and maintenance costs as reasons for the forced increase.
Calculations show that for a full-time driver, assuming a four-week break annually, the yearly cost to rent an electric taxi could exceed £19,200. Adding daily fuel expenses, which may average £30, the annual breakeven point for drivers could be around £26,400. This translates to an operating cost of about £110 per shift, based on a 5-day work week over 48 weeks.
Even in 2023, with an average rental fee of £350 per week, the total annual cost for drivers stood at approximately £24,000. These figures do not include additional expenses such as annual licensing fees, which add to the financial burden for taxi drivers.
The shift towards environmentally friendly taxis has seen over half of the black cab fleet becoming zero-emission capable. However, the high cost of these models, typically costing upwards of £63,000, escalates further with finance interest rates nearing 9%. The upcoming termination of the Government's "plug-in vehicle grant" in April 2024, which currently offers £7,500 towards new taxis, is set to compound these financial challenges further.
Fleet owners this month shared their concerns for changes to extended warranties placed on black cabs and explained how they would push up costs for customers
Paul Byron, HP Taxis, said: “Another hammer blow from LEVC. The warranty extension on new cabs has increased to £1,500 plus a claim excess of £250 thus putting a stealth increase into the cab… will push up rents on new cabs.”
A spokesperson from rental firm Colts Cabs, said: “New price rise on sale of new vehicles coupled with limited cover on 4/5 year extended warranty means you can only sleep safe at night for 3 years…. BEST TO RENT as now over 50 percent of cab drivers do!”
The decrease in the number of wheelchair-accessible taxis, from 21,026 in April 2018 to 14,743 in January 2024, as reported by TfL, also highlights the changing landscape of the taxi industry in London.
In response to these growing concerns, the Mayor of London announced just before Christmas that he would explore new ways to financially support taxi drivers in the city. The announcement formed part of a broader 'new vision' for the taxi industry, aiming to address the economic pressures faced by drivers while balancing environmental considerations and the evolving needs of urban transportation.
Khan said: “As part of the work around the new vision we are going to create for the taxi industry we are looking at what more we can do.
“You mention the fact that only one manufacturer makes the new taxis, there used to be three, I understand the reasons that the number of vehicles sold are limited, you can understand why no new manufacturer would invest. It’s the same challenge we have with double decker buses. It’s a limited market so it’s difficult to get new people in there.
“We are looking at what we can do to reduce costs. You mention the consequence of finance. Even if you’re saving on fuel bills, that is a big monthly outgoing in relation to your payments. So the Commissioner and Deputy Mayor have seen this and are working with industry representatives to see what they can do, and by the way manufacturers, and that includes those who retrofit as well.”
