The convenience of paying for an Uber comes at a cost for taxi companies in major cities.
A New York Times article took a look into the pressure that taxi companies are facing from the rise in popularity in Uber, which includes the decline in taxi medallion prices that has been spurred by companies like Uber entering the market. The Times analysis showed that average prices of a New York City taxi medallion fell 17 percent in October to $872,000 in October. The same case goes for Chicago and Boston, where prices are down 17 and 20 percent, respectively; Philadelphia is also seeing tan impact.
The Uber payment system has inevitably created a market shift in the taxi industry, but there are other factors. The Times also reported that the "turmoil in the medallion market" is also because data publicly released about tax medallion prices can be misleading. But one thing is clear — times are changing for taxi companies and Uber has undercut that system by evading the medallion system.
“I’m already at peace with the idea that I’m going to go bankrupt,” Larry Ionescu, who owns 98 Chicago taxi medallions, told the Times.
But here's what the Times had to say about the cab company owner's concerns: "That might be overly dramatic. ...it’s likely Mr. Ionescu remains a very rich man. In November, Chicago medallion sale prices averaged $298,000, well below the $357,000 price that was typical this spring, but far up from the $50,000 price of a decade ago."
But data about Uber does back up some of the cabbie's concerns. It's getting harder and harder to compete with the payment convenience and price of Uber.
"A seven-mile ride from the Loop to the University of Chicago in a medallion taxi costs about $26, including tip. The same trip cost $12.29 this April with UberX, the lowest-cost service option from Uber," the Times reported.
Data reported from the Times about medallion prices reveled that prices are misleading because of inaccurate reporting practices. For example, a medallion that's sold at a particular price to one company may not be sold for the same because of market changes. The amount of medallions being sold is also impacted by companies like Uber. As the article explains: "Just because somebody sold a medallion for $300,000 doesn’t mean it will be consistently possible to sell at that price into a thin market."
“Those are fake prices,” Mohammad Kamran, a medallion broker in Chicago, who blames UberX, told the Times. “The price has plunged big time, and there are no buyers or sellers because the lenders are not lending money.”
The case in cities like Boston shows a similar story. In April, Boston taxi medallions were selling for $700,000, the report said. The last sale reported? October, the article said, and that was for $561,000.
“Right now Uber has a strong presence here in Boston, and that’s having a dramatic impact on the taxi industry and the medallion values,” Donna Blythe-Shaw, a spokeswoman for the Boston Taxi Drivers’ Association, said in the article. “We hear that there’s a couple of medallion owners that have offered to sell at 425 and nobody’s touched them."