4 minute read
The C word
CONSOLIDATION IS INEVITABLE IN JUST about every industry – the big fish snap up the smaller fish, and become bigger fish –until even bigger fish enter the stream and snap up the big fish. Soon you just have a couple of leviathans in the river, wondering what they should do now the food has dried up.
This is basically what’s happening in the UK taxi and private hire market. Over the past few years, a number of mergers and takeovers have resulted in the emergence of consolidators such as Veezu and Take Me, both striving to achieve something like national coverage and national branding.
Meanwhile, other reasonably-sized companies have been active, expanding into new markets – Street Cars and DG Cars, for example, are no longer one-city players. There’s no indication that this trend is going to slow down – and large operators are often faced with a difficult decision.
Do they keep going as a local market dominator? Do they try to grow by moving into neighbouring towns, or buying local rivals? Or do they put their business in with a bigger group – the way Sheffield’s City Taxis has done with Veezu, for example. I suspect route three has a lot of appeal for many operators.
Meanwhile, a proper big fish is making its presence felt in the stream. Singapore-based ComfortDelGro has been around for a while in the UK, most notably through its ownership of the ComCab black taxi brand. But in 2018, it sold the London arm of this business to Addison Lee, though it retained the Liverpool and Aberdeen bits of ComCab.
It has more recently added a couple of big private hire operators to its portfolio – Argyle Satellite on the Wirral, and King Cabs of Chester, leading to speculation that ComfortDelGro might be planning to “do a Veezu” in the market.
But instead, ComfortDelGro’s big play seems to be into the world of aggregators. It’s been present with CityFleet for a while, but hasn’t done much with the brand. But now, through the £80 million acquisition of market leader CMAC, ComfortDelGro is taking a different path to becoming a big player in the UK.
The potential for CMAC globally is substantial – and ComfortDelGro is already a global player, with 34,000 taxis on its books, mainly in Singapore, Australia and China as well as the UK.
Whether the CMAC deal means ComfortDelGro will remain acqusisitive is another matter. It’s clear that owning an aggregator and owning fleets are not mutually exclusive concepts. Nor does owning an aggregator mean you’d favour in-house fleets over everyone else – a dynamic operation such as CMAC is reacting to disruption, so probably can’t afford to be too strict about where the work goes. In any case, ComfortDelGro’s UK businesses are already CMAC users.
Of course, ComfortDelGro might choose to grow by acquing a consolidator – both Take Me and Veezu are citybacked businesses and there must be an end game for them. Addison Lee too.
ComfortDelGro is well placed here – it knows how to run taxi services. It’s worth remembering that not every transport giant that tries to run a cab firm succeeds. Remember when Transdev, a giant in public transport fleets with interests in rail, bus and tram, bought Green Tomato Cars? It didn’t go so well, and the company pulled out of the car sector.
The other fish in the consolidators’ pond is of course Uber. Having taken the surprising decision to axe its Local Cab experiment last year, there’s much speculation about what it will do next.
Uber is under pressure to make money, and that’s likely to result in a sharper focus on where it operates. Local Cab took it into many smaller towns, but not without problems. Will Uber go back to launching into cities where it now no longer has a presence? Perhaps – but only if it can secure enough work and find enough drivers. And that might rule out many smaller towns.
Meanwhile the consolidators have the opportunity to lock down their cities – if you’re running 1,000 cars or more in a city, where’s the space for Uber?
The ride-hailers are getting a bad reputation for cancelling bookings. Dr Mike Galvin has some interesting thoughts on this on page 29. And it would seem that if you deliver a consistent and reliable service – so when a customer orders a cab, they get a cab – you’ll have a competitive advantage over the ride-hailers, whose multi-app drivers are picking and choosing which jobs to accept. Simple, no?
