Just four years ago, the cost to purchase a New York City taxi medallion, an essential license needed to operate a yellow cab, hit $1.3 million. A hefty sum but worth it given the lucrative trade in shuttling New Yorkers around the city’s five boroughs. But not anymore.
The price of a taxi medallion crashed to its lowest level in about a decade when one sold for $241,000 in March. Last year, medallion sales ranged from $325,000 to $750,000. What has happened since 2013? The arrival of ride-hailing services such as Uber and Lyft, which are now a competitive force on the city’s streets.
The March sale was just the latest sign of their devastating effect on New York City’s yellow cabs. In January 2017, medallions accounted for 48 percent of total trips logged by yellow taxis as well as cars dispatched by ride-hailing companies. That’s down from 68 percent in January 2016.
Last year, lenders foreclosed on 39 medallions, more than triple the amount in 2015, according to Taxi and Limousine Commission (TLC) head Meera Joshi. The city controls the number of yellow taxi medallions, capping it for the last couple of years at 13,587.
However, Uber has 51,000 vehicles affiliated with its service, while Lyft has 1,500, according to the TLC.
“The problem is too many drivers chasing too few passengers, and the city abdicated its responsibility,” medallion owner Carolyn Protz told the New York Post earlier this month. New York cab drivers aren’t the only ones suffering from the onslaught of the hail-ride services.
Drivers in cities like Boston, Washington, D.C., and Los Angeles also blame their new competitors for steep declines in business, adding that the newcomers don’t face the same legal requirements the incumbents must meet.
Last year, San Francisco’s largest taxi company, Yellow Cab Cooperative, filed for bankruptcy, citing ride-hailing companies as a contributing factor to its financial woes, published reports said. Barwood Car Co. in Kensington, Maryland, suffered the same fate, according to news articles.
Last month, New York City changed some of the regulations governing medallions in hopes of easing the burden on owners. For example, the transfer tax on a sale was dropped to 0.5 percent from 5 percent. Also, owners of single medallions are no longer limited to selling to someone who doesn’t already own one, opening up the pool of potential buyers.
“That is pretty important for an owner who wants to sell,” said Joshi. She said the changes were made in response to medallion owners’ complaints about the restrictive policies.
“We don’t want to be an impediment,” she said.