Taxi Buisness

[Hutch]

Could any one shed some light on the possibility of buying taxis in thai to rent out to thai drivers.Can it be done by a westener and what would the set up costs be.

[nrp1000]

Could any one shed some light on the possibility of buying taxis in thai to rent out to thai drivers.Can it be done by a westener and what would the set up costs be.

[steveromagnino]

Could any one shed some light on the possibility of buying taxis in thai to rent out to thai drivers.Can it be done by a westener and what would the set up costs be.

Probably in theory yes, but in practice I cannot see how you would be competitive, given that the major operators of fleets probably have better connections with the better drivers, first mover advantage, access to financing and economies of scale in purchasing and fleet maintenance, experience and ...perhaps most importantly.... have security to look after their interests.

This is a business dealing with sometimes unlicensed and often uneducated short term staff (drivers) looking after a fairly expensive asset. You need them to respect you.

You also would need your competitors to respect you.

If you could not acheive the last 2, I suspect that the whole business will be either financially dangerous or perhaps even dangerous personally.

Outside of BKK there is a reason why there are no taxis in some cities. Any attempt to compete against the song taew fleet without express permission from the right person (e.g. Kamnan Bo in Bang Saen) would be financial suicide.

In BKK, what i see is a fairly moderate margin financing business, which succeeds through scale.

There are a few coops like Suvarnabhumi (the green ones) doing things a different way, but they have a lot of experience in this.

I cannot comment on the regulatory nature.

However, limo services and tours is a different kettle of fish. That may have possibilities; however how will you maintain a cost/service advantage, when in general farang business people working here require higher salaries and sometimes need language support and associated costs compared to their Thai counterparts?

In summary, what is your competitive advantage and core competence in this venture that will make you succeed?

I am interested to hear this....

[steveromagnino]

Could any one shed some light on the possibility of buying taxis in thai to rent out to thai drivers.Can it be done by a westener and what would the set up costs be.

about the numbers....

buying vehicle (assume new) is about 700,000

- must be 1.6litre

- a few registration stuff

- major companies get a 'taxi spec' with slightly different seats and so on to reduce maintenance

- additional 50,000b for gas conversion

Rental

- 12 hour shift is somewhere between 600 - 675 baht for the driver

- assume you can run the car 13 shifts a week (with 12 hour period for maintenance)

- income = 13 X 650 = 8,450b a week = 430,950b per year (51 weeks a year)

- driver responsible for cleaning and fuel (about 1500b of fuel a day at a guess)

Less direct costs

- registration

- insurance

- maintenance of vehicle (much cheaper with your own garage)

Less non direct costs

- what you make as salary no idea

- office staff, about 3 staff min @ 7k per person per month = 240k

- theft risk assume 1% risk = 7k

- accidents and loss of earnings = assume 1 week a year +8450b

- parking area no idea

- major engine rebuild and interior fixes = amortise 1 major work in 4 years at 200k = 50k p.a.

- depreciation on the vehicle (25% first year DV = 25% of 750k = 188k)

EBIT = no idea

As you can see it is a scale business, but I have huge holes here; I could find out for you, but I think you need to explain a little more to justify me doing so for you. :-)

So...back to you :-)

[Hutch]

Could any one shed some light on the possibility of buying taxis in thai to rent out to thai drivers.Can it be done by a westener and what would the set up costs be.

about the numbers....

buying vehicle (assume new) is about 700,000

- must be 1.6litre

- a few registration stuff

- major companies get a 'taxi spec' with slightly different seats and so on to reduce maintenance

- additional 50,000b for gas conversion

Rental

- 12 hour shift is somewhere between 600 - 675 baht for the driver

- assume you can run the car 13 shifts a week (with 12 hour period for maintenance)

- income = 13 X 650 = 8,450b a week = 430,950b per year (51 weeks a year)

- driver responsible for cleaning and fuel (about 1500b of fuel a day at a guess)

Less direct costs

- registration

- insurance

- maintenance of vehicle (much cheaper with your own garage)

Less non direct costs

- what you make as salary no idea

- office staff, about 3 staff min @ 7k per person per month = 240k

- theft risk assume 1% risk = 7k

- accidents and loss of earnings = assume 1 week a year +8450b

- parking area no idea

- major engine rebuild and interior fixes = amortise 1 major work in 4 years at 200k = 50k p.a.

- depreciation on the vehicle (25% first year DV = 25% of 750k = 188k)

EBIT = no idea

As you can see it is a scale business, but I have huge holes here; I could find out for you, but I think you need to explain a little more to justify me doing so for you. :-)

So...back to you :-)

thanks for your input.i have just returned from thai for the 3 rd time and now just pondering with the possibilities of stting up 1,2 or 3 taxis but have no clear insight to the no how.

I could be prepared to invest anywere from 30 to 90 k australian.

for now im serching to find as much info as possible but have no set plan as yet..

thanks again

[Heng]

- maintenance of vehicle (much cheaper with your own garage)

This is important. You probably don't want to rent a place and wake up in "debt" every single day (like your taxi driver employees are doing). So you'll want to find a strategic location to place your base. I don't know anyone who has built a garage, but you can probably start with an semi-open air shelter (like what the car tents and outdoor bbq places use). Last outdoor bbq place an aquaintence of mine built: price tag (to the owners) 3 million Baht. 300 sqare wah, only about a dozen foundation pillars, and fairly bare bones.

[johnnyk]

Where do people get these amazing ideas?

Edited March 9, 2006 by johnnyk

[Carmine6]

- maintenance of vehicle (much cheaper with your own garage)

This is important. You probably don't want to rent a place and wake up in "debt" every single day (like your taxi driver employees are doing). So you'll want to find a strategic location to place your base. I don't know anyone who has built a garage, but you can probably start with an semi-open air shelter (like what the car tents and outdoor bbq places use). Last outdoor bbq place an aquaintence of mine built: price tag (to the owners) 3 million Baht. 300 sqare wah, only about a dozen foundation pillars, and fairly bare bones.

Different opinion. If anyone is going to do something this crazy, they should borrow as much money as they can. Keep other assets on the side so there's something if it fails. Finance the cars, rent the maintenance space, finance the consruction, etc. If the business can't cover the interest, then it's really not a viable business anyway. It's also the only way to get it big enough that the slim margins can support a salary for the owner.

The difference between the owner and the employees? The company he owns is in debt, but the owner has money in the bank.

[terdsak_12]

Sounds like a fast track idea to a hole in the back of the head to me.

[Hutch]

Sounds like a fast track idea to a hole in the back of the head to me.

I get the feeling that a taxi buisness in thailand could be dangerous to me physically..unfortunatly

i think ill keep away from that one

Would it be safer with limos.Thanks for the help....

[steveromagnino]

Different opinion. If anyone is going to do something this crazy, they should borrow as much money as they can. Keep other assets on the side so there's something if it fails. Finance the cars, rent the maintenance space, finance the consruction, etc. If the business can't cover the interest, then it's really not a viable business anyway. It's also the only way to get it big enough that the slim margins can support a salary for the owner.

The difference between the owner and the employees? The company he owns is in debt, but the owner has money in the bank.

True Carmine, except that the cost of debt will be massive, since he is not going to be able to bank from any sane bank; the risk is high; and that probably means significant interest rate which would be crippling in a capital intensive business OR sign personal guarantee which leaves the OP back where he started.

So I think your point 'if the business cannot cover the interest' is key here.... after all the cost of capital for this type of business should be probably be about the risk free rate of Australia plus a healthy doubling or tripling to cover off the business risk; I am thinking at least 30% min return per year would get be vaguely interested in such a venture.

Difference between owner and employees? Owner takes on risk from investing capital, and therefore receives (hopefully) superior returns on his investment compared to dumping in the bank. Employees receive payment for work carried out, and what they do with their own money is up to them.

OP -

Perhaps you can explain what your current employment is, and we may come up with a more suitable idea for you; one of my cousins is in a similar business to this renting motorcycles to the motorcycle taxis on finance... some of his 'assistants' are not the sort of guy you would want to run into in a dark alley. For your own safety and also for better returns, you could probably make more in the share market here.

I'd say 10% minimum returns are relatively easy, just investing in high div stocks.

[samran]

Unless you are driving your own taxi/limo, I wouldn't bother. I'd suspect you'd get a better return putting your money in a high interest bank account.

[Carmine6]

Different opinion. If anyone is going to do something this crazy, they should borrow as much money as they can. Keep other assets on the side so there's something if it fails. Finance the cars, rent the maintenance space, finance the consruction, etc. If the business can't cover the interest, then it's really not a viable business anyway. It's also the only way to get it big enough that the slim margins can support a salary for the owner.

The difference between the owner and the employees? The company he owns is in debt, but the owner has money in the bank.

True Carmine, except that the cost of debt will be massive, since he is not going to be able to bank from any sane bank; the risk is high; and that probably means significant interest rate which would be crippling in a capital intensive business OR sign personal guarantee which leaves the OP back where he started.

So I think your point 'if the business cannot cover the interest' is key here.... after all the cost of capital for this type of business should be probably be about the risk free rate of Australia plus a healthy doubling or tripling to cover off the business risk; I am thinking at least 30% min return per year would get be vaguely interested in such a venture.

Difference between owner and employees? Owner takes on risk from investing capital, and therefore receives (hopefully) superior returns on his investment compared to dumping in the bank. Employees receive payment for work carried out, and what they do with their own money is up to them.

OP -

Perhaps you can explain what your current employment is, and we may come up with a more suitable idea for you; one of my cousins is in a similar business to this renting motorcycles to the motorcycle taxis on finance... some of his 'assistants' are not the sort of guy you would want to run into in a dark alley. For your own safety and also for better returns, you could probably make more in the share market here.

I'd say 10% minimum returns are relatively easy, just investing in high div stocks.

Yup that's the whole point. If the business isn't returning enough to cover the interest, then the flip side is, it wouldn't be giving a great salary or return on the investment to the owner if its all equity funded.

Edited March 9, 2006 by Carmine6

[alexth]

It would be only a financial suicide, it would be a real suicide. Unless you don't have the most powerful and top rated connections, it's an entire mafia running this business and I think you wouldn't be up to it...even the PM Toxin has a company, the biggest one as I am hearing...I think you should concentrate your investment in something else, I'd do if I were you...

[ThaiPauly]

It would be only a financial suicide, it would be a real suicide. Unless you don't have the most powerful and top rated connections, it's an entire mafia running this business and I think you wouldn't be up to it...even the PM Toxin has a company, the biggest one as I am hearing...I think you should concentrate your investment in something else, I'd do if I were you...

Agree 100%

[Hutch]

Thanks guys,ill definately forget about that one.

[englishoak]

Wise move

Edited March 13, 2006 by englishoak

[Heng]

It's not all mafia run. That's partially urban legend (kind of like... "all bar owners must pay the police to stay open"). I know more than a few folks who run modestly successful taxi garages without any kind of such issues whatsoever. The average falang business owner is more likely to run into trouble saying the wrong thing to someone more important than them than actually running into any real organized crime figures in the LOS.