The recession and strict regulation have limited industry growth.
Los Angeles, CA (PRWEB) November 08, 2013
Increased consumer spending and impressive growth in corporate profit over the past five years have helped the Taxi and Limousine Services industry out of a rough patch. “The industry is highly reliant on discretionary spending, and when the economy faltered during the recession, demand for nonessential segments of the industry such as luxury limousine and town car services fell heavily, as many consumers traded down to relatively less-expensive taxi services,” according to IBISWorld Industry Analyst Andy Brennan. As a result, revenue dropped 3.2% in 2009. Spending by consumers and the corporate sector have been responsible for the industry's rebound since the recession and revenue is expected to expand 2.0% per year on average over the five years to 2013. The industry's performance is expected to be subdued in 2013, as the economy shakes out a few of its remaining cobwebs, with revenue increasing just 0.4% to $2.4 billion.
The industry is mature and has become saturated in some markets. There is market acceptance of taxi and limousine usage in major metropolitan areas, however, limited economies of scale mean the industry will never grow in outlying regions with low population densities. “Strict regulation has also limited the industry's growth, as the number of taxis in major metropolitan areas is essentially fixed,” says Brennan. This means self-employed taxicab drivers can only gain access to the industry by leasing a vehicle from an existing medallion holder. Since the recession, the number of industry enterprises has grown strongly, while a number of limousine companies have re-opened as profit margins have improved. However, over the next five years, enterprise growth is expected to remain relatively flat, as taxi medallion restrictions remain in place.
The Canadian economy is expected to enjoy a period of relative stability over the next five years, as consumers and businesses regain confidence and start spending. The industry's structure is not expected to fundamentally change, however, technological innovations will facilitate connectivity between drivers and customers, potentially helping profit margins. Mobile applications like Uber, TAG and Hailo have already made an impact in Toronto and Montreal, and operators will continue seeking competitive advantages to help them stand apart from the crowd.
For more information, visit IBISWorld’s Taxi and Limousine Services in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry provides passenger transportation by taxi and limousine. Taxi services are not operated on regular schedules or routes and limousine services are rented or hired with a driver. This does not include transporting passengers to or from hotels and airports using buses or vans.
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