Lockdown | Taxi industry will likely be one of few beneficiaries

SA Taxi says the industry will likely take more public transport market share because of Covid-19.
SA Taxi says the industry will likely take more public transport market share because of Covid-19.

The minibus taxi industry is poised to be the one of the biggest beneficiaries of the coronavirus crisis in South Africa, as the lockdown has disrupted train services while the looming global recession means less people will be able to buy cars, says industry financier Transaction Capital.

The company, which co-owns SA Taxi with SANTACO, says while it has set aside R126 million to provide for impairments this year, it expects the taxi industry to bounce back to normality much faster. It has already observed increased activity among taxi operators in April and the clear roads have meant more frequent trips and improved profitability for the industry that dominates public transport in SA.

"We have seen Prasa not reopening and other modes of transport being rendered ineffective during this period. The sale of vehicles has been going down…The county is getting poor. People aren't going to be able to afford cars.

"I think the minibus taxi industry, over the medium-term, will be the beneficiary of this," said Transaction Capital CEO, David Hurwitz.

New vehicle sales in SA plummeted 30% and 98.4% in March and April respectively. April sales were severely impacted by restrictions on motor dealer trading as car buying is not part of essential services during the current lockdown level.

SA Taxi too has not sold any minibus taxis or granted new loans during the six weeks of the lockdown. Hurwitz, however, said that because of the possible acceleration decline in new vehicle sales, a trend that has carried on since 2013 as more people opt for used cars instead, the taxi industry should take more market share.

The industry representative body, SANTACO, which owns 25% of SA Taxim has also moved swiftly to help it stay in business and thus retain its dominance in the public transport sector as the lockdown imposed some restrictions on taxi operators.

In April, SANTACO announced a R3.5 billion relief fund to help cushion the industry, as taxis were initially restricted to operate only during specified hours and minibus taxis are allowed to operate at 70% of their passenger capacity. SA Taxi also offered repayment ad insurance premiums holiday to qualifying minibus owners in April. This resulted in the company collecting only 20% of due repayments last month.

"In this month we expect to collect significantly more than that 20% with full recovery towards the end of the year. We are seeing our clients and the industry being particularly robust already," said Hurwitz.

Data presented by Transaction Capital during its results presentation on Wednesday showed that 68% of taxis financed by SA Taxi have been operating during the lockdown, active for roughly 58% of their usual operating hours with passenger loads of 70%, on average.

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