Businesses across Right Fuel Card’s SME customer base were recently surveyed to find out how confident they feel about the next 12 months and understand their future plans for their fleets. Many industries are struggling in the current climate; however, taxi and limo firms are especially pessimistic about the future, with less than half of respondents stating that they were positive about the next 12 months.
Cost increases and driver shortages across taxi and limo firms
A vast number of taxi and limo firms have concerns about the future of their industry as costs are increasing and the number of drivers has reduced significantly since the outbreak of Covid-19.
The Licensed Private Car Hire Association (LPCHA) has reported that since the beginning of the pandemic, more than half of licensed drivers have left the industry. Many drivers have left to work for other companies, such as Uber and Amazon, as they can offer more job stability and give drivers more control over their working hours.
Backlogs in processing licenses and applications have also contributed to the driver shortage as it’s now taking longer for drivers to enter the industry. Pre-pandemic applications generally took around six weeks to be completed, but it’s now estimated to be around 12 weeks. The process is even longer for fleets in London as drivers need to learn and pass the Knowledge of London test which can take three to four years to master. As a result, the workload of existing drivers has been increased which may lead them to look for work in another industry.
In addition, the financial strain on taxi and limo firms has been increase by the cost-of-living crisis which is significantly impacting those that are already struggling. Although fuel prices are now finally starting to decline, the financial strain of these costs has had a huge impact on taxi and limo over the last few months and it’ll take time for them to recover. As taxi tariff prices are regulated by the UK Government, drivers can only charge a maximum amount and so profits were limited as trips did not always cover the increasing cost of fuel. Some drivers were also forced to reject journeys in order to save on fuel as it became too expensive to make several smaller journeys. However, some local councils have agreed to raise taxi fares to offset the increase of living and cost of fuel which will help to ease the financial burden on drivers.
The introduction of more clean air zones across the UK is also adding to the pressure on taxi and limo firms. Businesses will need to either pay to update their vehicles so that they’re compliant or pay to enter these zones in their current vehicles. If fleets are unable to invest in electric vehicles, then they may risk losing business as they could be forced to try and avoid these areas, which are primarily located in major city centres. The financial consequences of these zones could lead to drivers looking for a new career which would further add to the driver shortage.
Several barriers preventing the adoption of EV technology
The sale of new petrol and diesel cars will be banned by the UK Government in 2030 and so taxi and limo firms will need to start considering greener alternatives for their fleets soon. Although some taxi and limo firms have already made the switch to hybrid vehicles, it was evident from this survey that there are still several barriers preventing businesses from investing in fully electric vehicles.
- Limited options. One of the main concerns that taxi and limo firms have about EVs is the minimal options that are available. Many models are believed to be unsuitable for business due to their size and limited driving range. As taxi and limo firms are constantly on the road, it would be impractical to have vehicles that are unable to last throughout the working day without needing to be recharged. Waiting times for a new EV are currently around 12 months which also makes it harder for businesses to make the switch.
- Slow charging times. As EVs can take a long time to recharge, drivers will struggle to pick up “at a moment’s notice” as they can do currently. For those that need to embark on long journeys, e.g. for airport transfers, slow charging times would be more challenging as it’s unlikely that customers would accept this if the battery ran out.
- Maintenance issues. Taxi and limo drivers generally embark on short drives which can cause the EV battery to wear down more quickly as it’s not given a chance to recharge properly. As maintenance issues can be expensive to resolve, this may deter taxi and limo firms from making the switch to electric.
- High purchase cost. EVs are considerably more expensive than their petrol and diesel counterparts and so many fleets do not have the financial means to invest in them.
We offer a range of fuel cards that can save taxi and limo firms time and money, helping them through these challenging times. Businesses can securely pay for their fuel and monitor all transactions through our online account management system which can help to prevent fuel card fraud. Explore our range of fuel cards here or contact our team at 0113 202 5110 to discuss your options further.
Matt DoddsWith over 14 years of experience across two of the leading fuel card companies in the UK, Matt Dodds joined RFC Edenred to help lead the development of products to support our customer's move to EV and other alternative fuels, a transition he feels passionately about.