Depending on how you approach it, car hire or taxi business can either have you laughing all the way to the bank or mourning all the way to your deathbed – quite literary. Just like in the matatu industry, this is a business that is best suited for the street-smart ladies and gentlemen and not the typical softie, office goers.
Why I’m I saying this? Well, the deal may look good on paper but it takes a bit of sweat and risk-taking for the investment to pay back. On a positive note, this is a business that has the capacity to lead you through a path of prosperity – you can start with one vehicle and grow into a fleet of cabs in a couple of years. Here’s a quick look at the pros and cons of car hire and taxi business in Kenya.
Pros
Growth Opportunities
The transport industry in Kenya is growing at a very fast pace in tandem with a bulging population. Besides that, with new airports and malls being built across the country, you can bet that the future of transport business is really bright. According to the Kenya National Bureau of Statistics, passenger transport in Kenya grew by 2.9 per cent to amass Ksh322.2 Billion in earnings in 2015 alone.
Free Time
If done right, this is the kind of business that can leave you with lots of free time. You only need to have a competent driver or a good fleet management company to handle the day-to-day running of the business.
Regular Workflow
If you do your marketing and networking well then you can get very key connections. For instance, you can easily land deals with NGOs or corporate and that way you will have more steady workflow and regularized cash-flow.
New Opportunities
With the advent of tech innovations like Uber you can expand your market and operate at cheaper cost.
Good Returns
On a good month you can make between Ksh35,000 – Ksh40,000 per month per car if you lease it out to a fleet management or taxi company. Alternatively, if you run the business yourself i.e. you hire a driver and manage everything else yourself, you can realize anything between Ksh40,000 – Ksh90,000 per car per month. NB: By car we mean just an ordinary saloon car, not the luxurious or high-end cars.
Cons
Expensive Repairs
If you are going to hand over the car to a fleet management company you may not have control over who will drive it or who will use it. For that reason you may find yourself making weekly trips to the mechanics due to problems emanating from reckless driving and poor maintenance.
Opportunists
Some fleet management companies are not reliable. They lease your car only to sell it out to unsuspecting buyers at throw-away prices.
Car Insurance
Normally, car insurance companies require higher premiums for vehicles used for this kind of business. This will of course mean you’ll have to dig deep into your pockets sometimes to a tune of Ksh80,000 p.a for comprehensive cover.
Anit-Theft Devices
You will need to invest in good anti-theft devices to safeguard you car and these obviously come at a cost.
Maintenance Cost
Most fleet management companies will require you to handle car maintenance e.g. replacing tires, shocks etc. In addition, there are some companies that pay less monthly as your car gets older.
Final Word
Contrary to popular opinion car hire and taxi business is not “the goose that lays golden eggs”. You are better off going it on your own as opposed to handing over your car to a fleet company to manage it on your behalf. Luckily, we live at a time where services like Uber are readily available and therefore you may not have to worry much about creating a client-network initially.
But on the other hand, you may lack the expertise and connections needed to sustain the business. If that is the case, then it is better to consider handing your vehicle over to a well-known fleet company. Make a wise choice.
