One of the most significant challenges within the taxi industry is gaining finance – many taxi operators battle to get finance for the vehicles that they require or they end up paying excessive interest costs. As John Jessup, head of sales and marketing at BAW South Africa, notes: “You cannot blame the banks; they are not in the market to take unreasonable risks.”
However this was a challenge that BAW set out to address from day one. “We wanted to come up with an innovative way of getting well priced finance to a broader base of taxi customers – and we believe that we have gone some way to achieve this,” Jessup reveals.
But how has BAW solved the financing and risk quandary? “We have established a factory reconditioning facility so, if a bank does repossess a taxi, that repossession can be converted into a valuable asset,” he explains. “We will respray the taxi, put in new seats, install a new drivetrain … do whatever is necessary to get that vehicle to a factory level of reconditioning.”
There is a huge market for properly reconditioned taxis. “These will be remarketed via our dealer network and refinanced by participating banks. Therefore this is a very creative way of offsetting a lot of the banks’ risk in terms of financing taxis,” Jessup explains.
BAW, with the invaluable assistance of the IDC, has already signed a finance agreement with ABSA.
Two of the other “big four” major banks are expected to sign agreements shortly.