Read on Twitter
One day I will share my story. For now, I will tell you why it is a bad idea and you should stay far away from it....
Here we go...
1. Running costs - the maths may look great initially, but factor in that you have to change from personal to commercial insurance cover
1/24 https://twitter.com/MulberryGlow/status/1325018816359895043
Here we go...
1. Running costs - the maths may look great initially, but factor in that you have to change from personal to commercial insurance cover
1/24 https://twitter.com/MulberryGlow/status/1325018816359895043
Your vehicle has to be registered as a taxi. Premiums will at least double. Premiums are a race to the bottom. You can find cheaper insurance, but insurers protect themselves by having ridiculous excess structures. imagine having to pay R37k excess fee
2/24
2/24
Every year the car has to go for inspection and roadworthy tests. Your car will be doing ~85 000 to 100 000km a year.
You may not feel the burn initially, while the car is relatively new and has a service plan, but once that plan is up... the pain starts
3/24
You may not feel the burn initially, while the car is relatively new and has a service plan, but once that plan is up... the pain starts
3/24
2. The system relies on renting out your car at below-market rates. There aren't many formal renting places where you can get a sedan for less than R350 a day, without a deposit, with no mileage limitation and no responsibility for anything happening to the car
4/24
4/24
Typically - you rent your car out for a fixed weekly fee, typically from R1500 to R2500 per week, and you expect to receive that fee regardless of the mileage the car does.
You(The owner) are also responsible for upkeep of the vehicle...
5/24
You(The owner) are also responsible for upkeep of the vehicle...
5/24
A lot of drivers have shied away from places like WESBANK who rent out cars for ehailling & have a fixed + usage/mileage-based fee
So think about it. you give someone a car. No deposit, flat fee, you do maintenance, accidents, etc...
6/24
So think about it. you give someone a car. No deposit, flat fee, you do maintenance, accidents, etc...
6/24
Your costs increase over time, but the rental fee you can charge doesn't. If anything, it is likely go in the opposite direction, as your car gets older, and as the supply of cars also increases in the market. Owners become desperate and end up "settling" for less....
7/24
7/24
3. The driver - The driver is your single biggest risk. Most 'good drivers' are already taken, so your chances of getting a good(& rational) driver are slim. It's easy to become a driver as well, just a driving Licence and a PDrP licence, and you are off to the races
8/24
8/24
Initially, a lot of drivers have good intentions, but as they become more experienced and become part of 'cliques'... this may become problematic for owners
You should ask yourself why a driver does not have their own car.
9/24
You should ask yourself why a driver does not have their own car.
9/24
A lot are blacklisted, Many will not want to pay you a deposit. You will get reasons like "where do I get money while I am looking for a job"
My view: if even family members are not willing to help you with a deposit, should I really be trusting you with a R200k vehicle?
10/24
My view: if even family members are not willing to help you with a deposit, should I really be trusting you with a R200k vehicle?
10/24
In a parallel universe, riskier customers/applicants are charged higher fees(think mashonisas), not lower.... but the ehailing industry does the exact opposite. Someone pays you below-market rates for their own higher-risk profile
11/24
11/24
You think a contract might do the trick? WRONG! It is not easy to enforce a contract with someone who does not have much to lose. You will be wasting your own time, money and effort
Also, the ehailing companies do not involve themselves in disputes between owner & driver
12/24
Also, the ehailing companies do not involve themselves in disputes between owner & driver
12/24
I am yet to meet a driver who stuck with the same owner through an accident or difficult period. Most just move on to the next place where they can get a car from another unsuspecting owner renting out their cars.
The excuses for not cashing up
it gets darn creative
13/24
The excuses for not cashing up
it gets darn creative13/24
4. It's a high risk industry. You will be very lucky if 2 years passes accident & incident-free. Every weekend there is a ehailing car involved in an accident. Just check the pictures posted on social media. accidents, abandoned cars, hijacks, armed robbery..list goes on
14/24
14/24
5. Here's a practical example
Car instalment: R4 400
Tracker: R200
Insurance: R2400
Weekly rental income - R2000(if you're lucky) = R8k per month
Monthly profit - R 1 000
Every 2 - 3 months the car needs service, brake pads, etc
15/24
Car instalment: R4 400
Tracker: R200
Insurance: R2400
Weekly rental income - R2000(if you're lucky) = R8k per month
Monthly profit - R 1 000
Every 2 - 3 months the car needs service, brake pads, etc
15/24
Insurance basic excess is R15 000 for taxis...
When do you get to provision for all of that while the car is hard at work, & is depreciating at high rate due to mileage travelled. R1000 per month
When applying financial health principles of a 3 month emergency fund...
16/24
When do you get to provision for all of that while the car is hard at work, & is depreciating at high rate due to mileage travelled. R1000 per month
When applying financial health principles of a 3 month emergency fund...
16/24
In a nutshell, you are taking too many risks for too little return. If you were to factor in AA rates, you are running at a loss from day 1. These cars typically do 30% to 40% dead mileage(driving with no client in the car) - the car is not generating money
17/24
17/24
Every year, running costs increase while income decreases. The leading ehailing companies have increased their prices only once in the past 3 to 4 years. With new competitors entering & leaving the market, no one wants to lose market share. It's a race to the bottom.
18/24
18/24
I can count at least 20 failed 'local' companies.
New market entrants hope to gain market share by under-cutting competitor's prices. There seems to be no other way to compete in the industry than through price. This means less for the existing drivers/owners to share.
19/24
New market entrants hope to gain market share by under-cutting competitor's prices. There seems to be no other way to compete in the industry than through price. This means less for the existing drivers/owners to share.
19/24
If you want to make a success of this industry, drive your own vehicle. U can make just as much(if not better) profit driving yr own car on weekends
This industry is part of the 'GIG-economy' and is not a good 'full time' job alternative...but we got 30.8% unemployment
20/24
This industry is part of the 'GIG-economy' and is not a good 'full time' job alternative...but we got 30.8% unemployment
20/24
It's nice if you have a car that you bought in your personal capacity, and can use it over the weekends to make extra money... but don't buy a car specifically for doing this job. It will end in tears.
21/24
21/24
Since the lockdown started, a lot of cars have been repossessed as household income and economic activity have dried up. Look around.... there aren't as many ehailing (Uber/Bolt)cars on the road as there used to be before the pandemic
22/24
22/24
A lot of driver are out of jobs, this should help the bargaining position of car owners to get something clos to market-related rental income.....
That's of you are still keen on renting out your vehicle
23/24
That's of you are still keen on renting out your vehicle
23/24
Do you have any other related questions I have not address in the thread? Let me know, and i will be more that happy to share my opinion from my experience in the industry....
24/24
24/24
