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Taxi industry goodies, Part 2

Thursday, November 13, 2014 - 11:35

As mentioned in the earlier post about taxi industry statistics, listing prospectuses can be a great source for finding out information about a company or an industry. Taxi operator Trans-cab Holdings is aiming to list on Nov 20, and its prospectus has some interesting tidbits.

One set of data that caught my eye was a forecast by Euromonitor International on the size of the Singapore taxi fleet through 2018. Except for a modest 0.6 per cent fleet growth predicted for 2014, Euromonitor is arguing for a 1.9 per cent growth in fleet size every year after that until 2018.

That may be slightly optimistic based on current rules and trends. Here's why:

The growth of the taxi population is currently capped at 2 per cent per year through 2015. That is due to regulations introduced in 2013 that allow operators to increase their fleet size by 1 per cent every six months only if they are able to meet certain taxi availability standards. Therefore, to meet Euromonitor's forecast of 1.9 per cent growth per year, almost all the operators will have to meet the minimum standards set by the Land Transport Authority.

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But that has not been the case this year. As of September, all but two of the six taxi operators failed to meet the requirement that at last 80 per cent of their vehicles achieve mileage of at least 250 km per day. Trans-cab disclosed that it failed to meet the availability standards in the first halves of 2013 and 2014, a 1-in-3 success rate. Of course, the failure rate could yet change. The taxi operators could improve their performance, or the regulator could relax the standards, in which case Euromonitor's forecast may be more attainable. At the current state of things, however, Euromonitor's outlook seems a little rosy.

Another way to try and figure out the future taxi population is to look at the total Singapore population. Based on June 2014 figures, there were about 27,865 taxis in Singapore for a total population of about 5.47 million people, or about 5.1 taxis for every 1,000 people. Now, the much-reported population white paper estimates that Singapore's total population could grow to about 5.8 million to 6 million by 2020, which works out to an annual growth rate of about 0.98 per cent to 1.55 per cent. Assuming that the taxi penetration rate does not change significantly, both those rates of growth are below Euromonitor's forecast. To achieve Euromonitor's 1.9 per cent growth, taxi penetration will have to increase to 5.3 taxis per 1,000 people. Taxi penetration could be nowhere near saturation in Singapore, in which case the penetration rate could presumably increase by quite a bit more. But keep in mind that Singapore's taxi penetration is already considered high by international standards: According to Euromonitor, Hong Kong has 2.5 cabs for every 1,000 people, Jakarta has 1.4, London 2.7 and Tokyo 3.9.

There is one year in which Euromonitor may have underestimated the growth in the number of taxis, and that is 2014, probably because its report was prepared without the benefit of the most recent months' numbers. As at August, the total fleet size in Singapore was 27,970 taxis, representing an annualised growth rate of about 1.5 per cent, although this could be inaccurate if there are seasonal factors, such as operators not buying new vehicles at the end of the year.

Based on the Singapore population forecast, that the year-to-August fleet growth in maintained, and that the taxi penetration rate does not change, the total taxi population in 2018 would be about 29,228 to 29,896, less than Euromonitor's prediction of 30,047 cabs.

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