In response to continued growth in corporate profitability and, consequently, demand for taxicab services, taxi fares are forecast to accelerate at a faster rate in the three years to 2017.
Los Angeles, CA (PRWEB) April 09, 2015
The taxicab services market has a buyer power score of 3.3 out of 5, which indicates an even split of power between buyers and suppliers. Low switching costs, low market share concentration and a high level of substitutes provide buyers with leverage during the negotiation process. “However, because transportation commissions regulate taxi fares, buyers of taxicab services are effectively price takers that cannot negotiate down the price of services and, therefore, can only negotiate on the level of services provided,” says IBISWorld procurement analyst Scott Winters.
Although taxicab service prices are subject to regulations, current market conditions are favorable for buyers. Buyers benefit from the high level of substitutes, thanks to the growing popularity of ride-sharing services like Uber and Lyft. Low switching costs allow buyers to enter and exit agreements freely without a substantial loss of investment. “Corporate taxi accounts are typically paid monthly and allow buyers the flexibility to switch to another supplier with ease, as long as buyers make their payments in full,” adds Winters. Moreover, low market share concentration gives buyers the ability to pit suppliers against one another to receive the best scope of services available. Additional services include customized billing programs, fleet access and party transportation.
Although price regulations limit buyers' ability to negotiate lower prices with suppliers, they also lead to low price volatility in the market. Because fares are regulated, price increases are usually insubstantial. Thus, buyers can rest assured that they will not be subject to sudden price hikes and can budget accordingly. For more information, visit IBISWorld’s Taxicab Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of taxicab services. Taxicab service providers transport passengers by automobile or van and do not operate on regular routes or on regular schedules. Buyers can obtain taxicab services from taxicab companies. Taxicab drivers operate as independent contractors but are excluded from the total number of suppliers in the market because buyers do not purchase services directly from them. This report also excludes services that are exclusively on-demand, such as limousine services and ridesharing companies such as Uber and Lyft.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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