How much it costs to own and operate a taxi in South Africa

SA Taxi, a subsidiary of Transaction Capital, has reported strong results despite headwinds.
The group’s latest results for the year ended 30 September 2022 showed that its direct division that sells new minibus taxis and rebuilt versions had seen a vehicle turnover of R1.48 billion in 2022 – up 46% from the year before.
Headline earnings for the division were R304 million, 26% below 2021 earnings. The group takes an average retail margin of roughly 5% per vehicle. Core earnings attributable to the group from SA Tax make up 24% of Transaction Capital’s earnings.
According to the group, minibus taxis remain the preferred mode of public transport in the country. It said this is largely due to their competitive pricing, accessibility and reliability compared to other public transport modes.
There are approximately 250,000 taxis on the roads, with the majority – 170,000 – unencumbered and aged, while the balance, around 80,000, are financed and insured.
The group reported that, on average, the retail prices for minibus taxis had risen 6.5% since September 2021. According to the group, the recommended retail price of South Africa’s most popular minibus, a Toyota HiAce diesel vehicle, was R528,800 in September 2022.
A typical new credit agreement for a taxi in South Africa could look like the following:
On top of the monthly instalment, however, taxi operators have been slammed by higher fuel prices in South Africa, impacting operating costs.
According to SA Taxi, rocketing diesel prices, in particular, have added approximately R6,000 to the monthly instalment over and above financing costs.
The first fares collected in July 2022 – after the Covid-19 pandemic and associated restrictions were removed – were insufficient to offset vehicle and fuel prices and came amid lower passenger counts.
Despite the headwinds, SA Taxi indicated that a taxi operator on its books makes, at minimum, R6,000 in profit a month.
The most common taxi is around 4.7 years of age, with more than 90% of all vehicles being Toyota. The market remains strong, with 1.2 vehicles per customer, with the most taxis concentrated in Gauteng.
2020 figures show the average person spends R960 a month for transport via taxi, and they spend an average of just over an hour in transit (63 mins).
Financial performance
SA Taxi Finance, a division of SA Taxi that grants loans and advances for prospective minibus owners, has performed well. According to the latest financial results, these advances grew by 9% to the value of R15.4 billion, with loans hiking by 7% year-on-year.
Demand for new minibus taxis and refurbished models still exceeds supply, said SA Taxi. The company has a dealership network that extends from Polokwane to Midrand, as well as the Western Cape and KwaZulu-Natal.
The company has increased its refurbishing capacity, now able to fix up to 400 taxis per month – up from 280 in 2020.
The Auto Repairs decision of SA TAxi rebuilds around 4,450 minibus taxis annually with a resale percentage above 75%. Its repairing factory floor is now considered one of the largest autobody repair and mechanical refurbishment facilities in Southern Africa.
It employs around 575 employees, and workshop facilities extend to 28,500 square meters of workspace.
Transaction Capital said that SA Taxi’s business model has evolved from a speciality financier within the minibus taxi sector into a vertically integrated mobility platform offering access to minibus taxi ownership, finance, insurance, maintenance and other allied services. It added that it intends to progress and expand.
Read: The average price of a used car in South Africa right now.