In 2010, Manjinder Singh and his brother bought a taxi medallion for $675,000. Today, it is worth as little as $241,000.
Once a bulletproof investment — one medallion sold for $1.3 million in 2013 — the taxi medallion market has been upended by the rise of ride-sharing apps like Uber and Lyft. The decline has left those like Mr. Singh, who own the cabs they drive, and some fleet owners struggling to make ends meet. Almost half of the 13,587 medallions in the city are owned by individuals, and most of them do not have the level of financial security that the fleets do.
Mr. Singh, who came to the United States from India 17 years ago, said that his shrinking income made his medallion’s $6,500 monthly payment increasingly difficult. If he misses payments, he said, he will lose his medallion and his home in South Ozone Park, where he lives with his wife, two children, mother, brother and sister in-law. Like many medallion owners, Mr. Singh used its estimated worth to help secure a loan for his home.
“We are totally, you know, trapped because whatever our savings was is gone, and whatever we paid as a down payment for the medallion is also gone,” he said.
During peak hours, the average yellow cab driver makes just under $21 per hour in net revenue, down 25 percent from two years ago, according to the annual Taxicab Factbook by the Taxi and Limousine Commission. The shift toward ride-sharing apps prompted the decline, said Bruce Schaller, who has 30 years of experience involving urban transportation policy.
The number of trips made by services like Lyft and Uber has jumped to 9 million per month, up from 2.6 million in 2015, according to a report he prepared for his firm, Schaller Consulting. Over the same period, yellow cab rides have declined by more than two million. Mr. Schaller, a former Department of Transportation official, said the shift toward ride-sharing was also a result of how yellow cabs operate.
“What impacts their ability to compete is that they aren’t service oriented,” he said.
Mr. Schaller said that while every taxicab can seem to be part of an undifferentiated mass, a rider who doesn’t like Uber, for example, can use Lyft, Via, Juno or Gett. That gives those companies extra incentive to keep riders happy.
Richard Lipsky, an advocate for taxi medallion owners, said the commission’s more lax regulations for ride-sharing services do not help. While the agency caps medallions at 13,587, he said there are over 50,000 ride-sharing app vehicles on the road. And instead of the six-figure cost of a medallion, ride-sharing drivers need to pay only $550 for a T.L.C. license.
“You can’t have a system where one competitor has an unlimited amount of folks on the road that plays by a different set of rules than the other competitors,” he said.
Most medallion owners use lenders to finance their way into the business. And as medallion owners struggle to pay their loans, the banks and credit unions that loaned to them are left scrambling as well.
Melrose Credit Union, the largest medallion lender in the city, was recently placed under control of the National Credit Union Administration by the New York State Department of Financial Services. The process, known as conservatorship, allows the supervisory agency to use aggressive practices to cut Melrose’s losses. The credit union had a 28 percent delinquency rate at the end of last year on its more than 3,000 taxi medallion loans.
Spyros Messados, who tries to help medallion owners compete with ride-sharing drivers, said the regulator refused to compromise with taxi drivers on their payments, even though the strategy has worked for other lenders.
Medallion owners are also pushing for a cap on T.L.C. licenses for ride-sharing services and a moratorium on medallion foreclosures, Mr. Lipsky said. That would allow struggling drivers to continue to earn an income while they work to revise loan repayment plans.
Until legislative action is taken, however, the outlook for medallion owners remains bleak, Mr. Schaller said.
“If you take current trends, there will be no medallion value in two years,” he said.