Philippines Books

A Quick Peak At What Can Be Either A Nightmare Or A Dream.

An expat I know owns nearly a dozen taxi’s in Cebu.  Each one brings in P600 per day “Boundary”.  Boundary is the term for rental and goes back to the days when there were boundaries taxi’s had to work within and is often confused with the more apt term of “bounty”.  Most cabs in  Cebu are worked 24/7 with a driver renting the cab for 24 hours by paying a boundary of between P550 to P700.  He then has to make enough to cover his gas which can be as high as P1000.  An average day will make him P500 and then he has a 24 hour break before getting another shift.  A good driver can look forward to making P8000-P10,000 a month, not bad for spending your day in airconditioned comfort.

For the owner of the cab, the story can be either a dream business or a nightmare, usually it depends on who you get to manage the business and drive the cabs.  If your cab is earning P600 a day, that’s P15,000 a month if you work on a 26 day month.  This allows for maintenance and drivers that don’t show, either sick or lazy.  Since you can buy a cab from P250,000 for the rinky dink Kia surplus cars you can achieve ROI (return of investment) in about  16 months, or a more realistically two years.  Whether the rinky dink Kia will last that long at the hands of a Filipino cabbie is another thing.

If you buy a new Toyota Corolla, the cab of choice for us Bears, then you will pay about P650,000.  Add in license fees and you are looking at probably four years to recoup your investment.  At the end of that time you can still sell your cabs and make a profit of 15% or more, depending how well the cab stood up to the work.

Maintenance is a major cost for the cab owner and many also diversify into running their own mechanical workshops, often making more money than the cab side of the business.  I devised a business idea last year for running car washes via a small, cheap pressure washer but all the know alls said nobody here would pay to have their car washed.  In the last six months I have seen dozens of car wash businesses crop up along the side of the road using the very same cheap pressure washers and doing a lot of cabs and other vehicles.  If you own a washer as well as the workshop and the cabs, you have the whole thing sewn up!  As the cab fleet grows the next thing you need is a used car dealership to move them on.  I don’t think the law here requires you to inform the prospective purchaser that the vehicle was previously a taxi, as you must back home.

My friend with the dozen cabs says at first it was an expensive gambit that was little more than a drain on his resources while he kept the car sellers and mechanics happy.  He went through several “trusted” managers before he found one who really was honest and efficient and hasn’t looked back since.  That manager now owns a share of the business, something my friend had intended all along but nobody stayed honest with him long enough to qualify!

Drivers were another problem.  He found he had to have them pay security deposits on the vehicles to get them to respect them and drive them with some care.  Now, two years down the track he has a core of reliable drivers who look after the vehicles.  I suggested he have two drivers share the same car every time and give them a rebate each month if the maintenance bill on the vehicle is below the average.  The average varies from month to month but each car can cost up to P5000 per month in oil, tyres, aircon and other general wear and tear even before bingles and scratches are looked at.  In the nine months since he trialled that idea his average monthly maintenance costs on those vehicles fell by 25% or more.

Naturally he doesn’t really “own” the business as it is illegal  for a foreigner to own 100% of a land transport business.  His wife is the owner and he supervises the manager.  At first he was supervising
virtually every minute of the day but now he has found a reliable manager he admits he pops in to the office once a day and more to be seen by the staff than to actually supervise anything.

Insurance on the vehicles can be cost prohibitive if you have a spate of accidents and premiums are increased beyond what is economically viable for the business to support, but that is perhaps the only other drawback to owning taxis.  Where most foreigners come to grief is that they buy a taxi and have a relative of the wife drive it and it is not treated as a business.  The relative either begrudges paying the boundary and being harped on at about looking after the car, or simply doesn’t care and works the cab only sufficient to bring in some beer money, fobbing off his Kano brother in law when the boundary is asked for.  More horror stories come to the fore when talking about accidents and minor car park scratches.  Other drivers often see a licensed Taxi as a ticket to get their existing panel work paid for.  Some drivers may even work in collusion with a relative to have an accident that is the taxi driver’s fault and has the relative’s vehicle being  repaired at the expense of the taxi owner’s insurance premium.

However, more is often less when it comes to headaches and nightmares and owning several cabs tends to add a note of serious attention and take the venture out of the hobby business mindset.  You can make money owning cabs and in many ways it is hassle free but it does take organisation, management and good selection of staff to begin with.