Cab drivers say they are afraid of January-February next year” because “young people are not riding at all” due to the biggest price hike since 1989….

Even I think this price hike is a bit excessive.

Cab fares were raised in Tokyo’s 23 wards, Musashino City, and Mitaka City on November 14. The starting fare will increase from 420 yen for a ride of 1,052 meters to 500 yen for a ride of 1,096 meters. The 14% increase is the largest increase since 1989.

In mid-December, Mr. Nozaki (pseudonym, in his 60s), a cab driver whom our reporter met in Akasaka-mitsuke, Tokyo, blurted out the following in the car when it was already late at night. Even a veteran taxi driver with more than 20 years of experience in the business could not hide his bewilderment at the price hike.

In the Akasaka and Ginza areas where I usually operate, the price per customer is high, probably due to the nature of the area. Perhaps because of this, there has been little change in sales even after the price increase. However, the demographics of the users have changed. Most of the recent customers appear to be company-related. I have the impression that the number of young people has clearly decreased since the price increase. Even if it is good now, I am afraid that in the long run, there will be a shift away from the cab business.

When the reporter arrived at his home in Nakano Ward, the fare meter read 4,300 yen. Compared to before the price hike, the fare was about 1,000 yen higher.

Surprisingly, according to Mr. Nozaki, there has been no significant change in the number of users since the fare hike. We also interviewed cab drivers in Shinjuku, Ginza, and other areas, and similar opinions were noticeable.

Masakatsu Iwata, president of Condor Taxi Group, had this to say about the cab industry after the price hike.

Looking back at the history of the cab industry, we have seen a decline in sales for two to three months after a price hike. This is because the price hikes have caused users to leave the cab fleet. We were prepared for a decline in sales in view of the scope of this price hike, but the number of users has remained flat at present. This was unexpected in a good way. In fact, sales per unit have increased due to the rise in unit prices. At our sales office, before the price increase, there was at most one driver who sold 100,000 yen a day. After the price increase, the average was 70,000 yen, and there are now about 10 drivers who sell more than 100,000 yen a day.

Behind the price increase is a serious shortage of human resources and the soaring price of propane gas. Since the COVID-19 crisis, the cab industry has been unable to stem the tide of job turnover. As a follow-up, the price of propane gas per liter has nearly doubled compared to 10 years ago. The result was a vicious cycle that further squeezed profit margins, said to be 3-6% per unit, and led to employee turnover due to the difficulty of returning profits to employee salaries. Mr. Iwata continues.

Since the early ’20s, there have been calls among cab operators in Tokyo for a price increase. Even though the companies made efforts to increase sales per cab by reducing the number of cabs in operation and giving more money back to the drivers, there was a structural limit to what could be done. In fact, during this past year alone, approximately 9,000 drivers had left the workforce in Tokyo. From the standpoint of securing human resources, it was no longer possible to avoid raising prices. The price hikes allowed motivated drivers to make sales and finally create the groundwork for earning. I believe that there will be a clear polarization of salaries between those who can make money and those who can’t.

Nevertheless, there are some uncertainties in the long run: the fact that the November-December period coincides with the easiest time of the year for sales to pick up, and the fact that the public has not yet been made aware of the price hike, are some of the reasons why the initial speed has not slowed down.

A cab driver who picked me up in Shinjuku said.

“You can really see the flow of people in a real sense from January to February of ’23. There were many times when I was blatantly disgusted when I paid. …… With the high prices of commodities and people’s lives being hard to make ends meet, I just can’t believe that the same kind of usage will continue as in the past. I am now dreading the coming year.”

He expressed his feelings with a downcast expression on his face.

It will be some time before the success or failure of the cab fare hike is known.