Chicago’s Taxicabs More Interesting Than St. Louis’ Taxicabs

In a recent post I wondered if local taxicabs could be more whimsical to compete with the likes of Lyft, Uber, etc.  It’s true nobody hires a vehicle because of a pink mustache, but they’re distinctive. This past weekend we were in Chicago for a few days. We drove up and parked in the garage of the condo building where we stayed — $84 for 48 hours with no in/out privileges. We walked and used the bus but we also took four cab rides. Taxicabs are everywhere in Chicago, no need to call and walk — just walk to the street and hail one. At least where we were staying.

Of the hundreds & hundreds of taxicabs we saw, I think only 1-2 were the Ford Crown Victoria that’s so commonplace in St. Louis. No wonder really, the last Crown Vic was produced in September 2011. Though large vehicles, they’re not any easier for me to get in/out of the backseat than any other 4-door.

Of our four trips three of the four were in hybrids: Toyota Camry, Toyota Prius, and Ford C-Max. The fourth was a black town car that stopped for us. The most common taxicab vehicle was saw while in Chicago was the Toyota Prius. We also saw Ford Fusion Hybrid & Nissan Altima Hybrid. We saw quite a few of the modern/stylish VPG MV-1:

The styling looks like an SUV-ish riff on the traditional London cab, with a low-step-in (or roll aboard) flat floor and oodles of headroom. Dimensionally, it measures 8.0 inches shorter in length, 2.1 inches wider, and 18.2 inches taller than the Crown Vic. The rear doors swing open (90 degrees on the passenger side) to reveal a bench seat wide enough for three amply proportioned passengers. An optional ($349) rear-facing jump seat behind the driver accommodates a fourth, and standard anchoring plates are fitted to secure two wheelchairs, though locking down the second one precludes use of the right half of the bench seat. There is currently no provision for fitting a front passenger seat, though one is being considered, along with a passenger airbag. (Motor Trend)

I want to ride in one of these on our next visit in a few months.

It isn’t by chance that Chicago has so many hybrids, their approved vehicle list is either hybrids or CNG. Other creative taxicab examples in Chicago is using social media and free wifi:

In addition to tweeting, he also allows clients (or potential clients, as the case may be) to follow him on Google Latitude or Find My Friends so that people know wherever he is at any given time and can contact him when they need a ride. He offers free WiFi within his cab for iPhone and iPad users (“Don’t use your limited data!” he says), and plans to soon offer free WiFi for regular laptop users. Sometimes, as seen in the tweet above, Temuri gives discounts for his social media followers, and he always remembers who everyone is. (ArsTechnica)

The St. Louis Metropolitan Taxicab Commission doesn’t appear to have an approved vehicle list. I know St. Louis is a conservative town but more regulation to push taxicab companies into buying hybrid vehicles would likely prove better for the industry, the companies bottom line, and our air quality.

— Steve Pattersom

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Readers: Auto Manufacturers Should Be Able To Sell Direct To Customers

The franchised auto dealership sales model has been around for decades, and a legal requirement to sell cars in the U.S.  According to the National Automobile Dealers Association the number of dealerships peaked in 1949 at 49,200, but by 2012 that number was down to 17,540.

The motor vehicle industry began with hundreds of manufacturers, but by the end of the 1920s it was dominated by three large companies: General Motors, Ford, and Chrysler. (Wikipedia)

Quite a drop in the number of manufacturers and dealers!

Here’s more background from a U.S. Department of Justice paper entitled Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers, May 2009:

Early in the evolution of the auto industry direct manufacturer sales to consumers were not uncommon. At that time, production processes had not yet been standardized and industry sales volumes were low. Introduction by Ford of the assembly line technique early in the twentieth century enabled high-volume production and ushered in the era of mass-market sales in the United States. Ever since then manufacturers have sold cars through franchised dealerships.

Selling through dealerships has offered several benefits to manufacturers historically. Auto production is a capital-intensive business and a franchise system allowed manufacturers to concentrate their resources upstream while accessing capital through franchise fees from independent entrepreneurs at the retail level. Economies of scale in auto production also required having relatively few, large manufacturing operations located near essential supplies like steel. This contrasted with the nationwide distribution network needed to reach consumers, who could be more effectively served through local dealerships in a better position to assess demand in particular markets and to provide service and repairs.

Since running a dealership can require making a substantial investment in real estate and assets like showrooms and service facilities, the franchise system also had to offer terms that would make it attractive to dealers. This was accomplished voluntarily by contract, through franchise agreements, even prior to enactment of state franchise laws. Typically such franchise agreements give a dealer exclusive rights to a particular geographic sales territory of a manufacturer. This type of arrangement allows dealers to realize a return on their investment while giving them incentives to undertake advertising and promotional activities and to provide services, like showroom displays, test drives and other types of consumer information, valuable to manufacturers in marketing their vehicles.

With the advent of the internet, some of the mutually beneficial nature of the franchise system for manufacturers and dealers has diminished, as information and access to services historically provided primarily by dealers has become more readily available. Online buying services are an obvious example. In addition, a variety of auto information, including pricing data and reviews, can be found online from sites like Edmunds and Consumer Reports. This raises the prospect of disintermediation, broadly defined as direct-to-consumer sales through reduction or elimination of the role of retailers. With respect to autos, unlike the situation with books and CDs, most customers probably will continue to want some hands-on contact with the product before purchasing, likely implying a continuing, though possibly changed, role for dealers. Since the internet can potentially provide manufacturers with better information on consumer preferences than the traditional local franchised dealer, direct manufacturer sales may be one way through which that changed dynamic occurs.

When the DOJ recognized how the internet changed the car buying process electric car maker Tesla Motors had only been selling the Roadster for a year, and had introduced the new Model S sedan just two months before. The odds were stacked against Tesla Motors before 2009, one auto site even had a Tesla Death Watch. In 2009 fortunes turned around:

Tesla Motors turned profitable for the first time in July, when the electric car manufacturer shipped a record 109 vehicles, the company said Friday. <snip> In June, privately owned Tesla borrowed $465 million from the Department of Energy to fund development of an all-electric sedan called the Model S — slated to sell for $49,900, or about half the price of the Roadster. (CNN/Money)

Wow, a “record 109 vehicles”!! But the Model S was a hit, from August 2013:

Upstart automaker Tesla Motors won’t sell as many cars this year as Chevrolet sells in 3 days, but its early success with the all-electric Model S sedan is already keeping the competition up at night. An examination of sales data from across the U.S. and in California for the first half of 2013 paints a picture of just why that is. While Tesla delivered right around 10,000 cars through two quarters, those sales appear to be coming at the expense of BMW, Mercedes, Lexus and Porsche. And Tesla’s sales are remarkably — though perhaps not surprisingly — concentrated in California thus far, with nearly half winding up in the Golden State. As the automaker continues to open new sales and service locations across the country while simultaneously growing its network of high-speed Supercharger stations, things are likely to get a bit worse for the imports. (Forbes)

The manufactures responded with new models, the franchised dealers responded with challenges to Tesla’s direct sales model. From October 2012:

Dealers across the country, perhaps afraid money-losing Tesla is somehow a threat, are trying to get the company’s stores knocked down as illegally operating outside the cartel-like, protectionist franchise system they helped put in place.

They may have a point, Tesla’s stores could be illegal factory operations under many state laws, but these are stupid laws and Tesla isn’t wrong for trying to get around them.

This is an issue that comes up occasionally, most recently when Chrysler was forced by its own dealers to sell a factory-owned store in Los Angeles. The argument dealers make (after years of political donations got them cushy deals) is that stores owned by the company that builds the car provides unfair competition. (Jalopnik)

But dealerships want to protect their industry, which depends on very high volumes:

The dealership industry already knows that all auto manufacturer websites now include a “build your own (model)” feature where customers can pick out the model, colors, options, etc and see the price online. In this regard Tesla Motors is no different than all the big manufacturers, except they don’t have inventory sitting around on dealer lots to sell. Dealers also aren’t a fan of electrics, to sell them effectively they’d need to bash the gasoline vehicles that keeps their lights on.

The push towards EVs is being driven largely by the Obama Administration, which is requiring automakers to double their aggregate fuel economy by 2025. Putting EVs in the mix is one way to skew the average. Car buyers also get a federal credit of $7,500 when they purchase an EV.

Even if dealers agree in principle with EVs, they aren’t great for the bottom line. “Dealers want to move metal, plain and simple,” Kiley says. “There is more education and selling required for EVs than gasoline cars. As long as gasoline remains under $4 a gallon in most of the country, sales of EVs and plug-ins like the Chevy Volt and Ford C-max Energi are going to have steep hills to climb — because the infrastructure to support them is still lagging.” (Mashable)

If manufacturers had a direct sales model they could offer low & high volume models, though they’d prefer to sell higher profit models. Last weekend we visited the model Tesla Motors store and service center to check out the process, even though the used 2007 Honda we recently bought is the limit our budget.  I wanted a better understanding, there I saw several serious buyers. One was sitting at an Apple iMac working on their order, others were outside.

The Tesla Motors website indicates a Model S ordered now is estimated for delivery in late September.

When I posted this poll last week I knew, based on my research, that most would favor allowing manufactures to sell direct. I just didn’t know bow much, but the poll here is non-scientific:

Q: How should auto manufacturers sell new vehicles?

1. All auto manufacturers should be able to sell directly to customers without going through franchised dealers 55 [70.51%]
2. Low volume auto manufacturers should be able to sell directly to customers without going through franchised dealers 12 [15.38%]
3. Unsure/no opinion 7 [8.97%]
4. All auto manufacturers should be required to go through franchised dealers to sell vehicles to customers 4 [5.13%]

Wow, just over 5% think all manufacturers should be required to use the franchised dealer sales model. The attempt by auto dealers to force out Tesla in Missouri is over for this year, but I expect they’ll be back again next year. But the public isn’t on their side, nor is the Federal Trade Commission:

For decades, local laws in many states have required consumers to purchase their cars solely from local, independent auto dealers. Removing these regulatory impediments may be essential to allow consumers access to new ways of shopping that have become available in many other industries.

This very question has been raised across the country, as a still-young car manufacturer, Tesla, pursues a direct-to-consumer sales strategy that does not rely on local, independent dealers.

In this case and others, many state and local regulators have eliminated the direct purchasing option for consumers, by taking steps to protect existing middlemen from new competition. We believe this is bad policy for a number of reasons.

It’ll be interesting to see how this plays out over the coming years.  Disclosure: we have stock in General Motors (GM).

— Steve Patterson

Why I’ll Be Voting Against the Sales Tax Increase in November

In November Missouri voters will be asked to raised the state sales tax by three-fouths of a cent, earmarked for transportation projects:

The tax increase would generate an estimated $534 million a year, with 90 percent of the money going to state projects and 10 percent to local projects. It would run for 10 years.

Critics say sales taxes are hardest on low-income people because a higher percentage of their income goes toward buying essential items. However, the 3 percent general fund portion of the current state sales tax of 4.225 percent is not applied to groceries or prescription drugs, and the increase would not be, either. (stltoday: Voters will decide whether to boost Missouri sales tax for highways, transportation)

Missouri’s current fuel taxes are below the national average, and the legislature squashed Gov Nixon’s veto of a state income tax cut measure.

In five annual steps beginning in 2017, the bill will cut the state’s top personal income tax rate to 5.5 percent from 6 percent and provide a new 25 percent deduction for business income reported on individual returns.

The cuts will be implemented only if state general revenue grows by at least $150 million a year compared with the high-water mark of the previous three years. (stltoday – Missouri Legislature overrides Nixon’s tax cut veto)

Back to our low fuel taxes:

All over the state roads & bridges are crumbling, and I’m a huge fan of investing in infrastructure. So why am I voting no? Simple, the money has to come from somewhere, but sales taxes on necessities (groceries, clothing) is the worst way to fund transportation.   The better option is to start by increasing our very low gas & diesel tax:

The gasoline tax has a lot of virtues from an economic point of view. It matches costs and benefits, because drivers who buy the most fuel are also causing the most wear on our roads. It’s easy to collect and hard to evade.

The fuel tax tends to be unpopular with the trucking industry, which would rather have the rest of us pay for the infrastructure that it uses most intensively. And trucking lobbyists tend to have a lot of clout in state capitols, which may be why the Legislature is talking about raising the sales tax instead of the gasoline tax. (stltoday: Sales tax is wrong way to pay for Missouri roads)

What about Oklahoma, why is their gas tax is 3 cents less per gallon? We should do what they do to keep from raising our fuel taxes, you might say. Fine by me!

Oklahoma has 10 turnpikes, more than 600 miles of pavement, making the state second in the nation for miles of toll roads. (Oklahoma Doesn’t Make Profit On Turnpikes; Who Does?)

Tolls, like fuel taxes, makes those who use the infrastructure pay for the infrastructure. I’ve paid more to Oklahoma  in tolls than in fuel taxes the last 23+ years of driving back to visit family.

A common misconception is more fuel efficient cars, hybrids, & electric vehicles have significantly reduced revenues collected from fuel taxes. It’s true, cars are more efficient:

Cars and light trucks sold in the United States hit a new record for fuel efficiency last year — 23.6 miles per gallon, on average — in response to still-high oil prices and strict new fuel-economy standards.

That’s a big step up from the 22.4 miles per gallon average for new vehicles in 2011. And overall fuel economy is expected to increase to 24 miles per gallon in 2013, another record. (Washington Post: Cars in the U.S. are more fuel-efficient than ever. Here’s how it happened.)

But that’s not why fuel taxes don’t cover needed work, just look at the federal highway trust fund:

The Fund is paid for by the federal gas tax. The gas tax has not been raised in over twenty years. Many items have doubled or tripled their cost since 1993. For example, a new car cost $12,750 in 1993, yet in 2013 a new car cost $31,252. The easiest explanation is that we are trying to build a 2014 infrastructure system with 1993 dollars. This is obviously an untenable formula. (Highway Trust Fund 101: What You Need to Know) 

Yes, the cost to build & maintain our infrastructure have been increasing while the Missouri & federal rate has remained flat.  For years inflation was masked because gasoline sales and total vehicle miles driven increased year over year, the funds grew too.

Rising costs and a slight drop in gallons of fuel purchased doesn’t mean we should now start taxing every purchase to maintain roads & bridges. But yes, the number of hybrids and others has increased, but the percentage is small relative to the big picture:

The number of alternative-energy vehicles on the road grew to almost 3.1 million in 2013, compared with 2.5 million in 2012, according to the study. In 2013, nearly 72,000 vehicles were pure electrics and three million were hybrids, compared with 21,000 pure electrics and 2.5 million hybrids in 2012.

Data for the analysis comes from Experian Automotive’s database, which includes information on nearly 700 million vehicles in operation. (New York Times – Experian Study Highlights Differences Between Hybrid and E.V. Owners). I encourage you to contact your elected officials in Jefferson City and Washington D.C to tell them to increase  the fuel taxes, not the sales taxes on goods. In November, please vote no on this sales take hike.

— Steve Patterson

Civic Center Transit Center Sans Trees, Awaiting Redo

In late March the Civic Center Transit Center, serving MetroBus and MetroLink, got a visually shocking change: all the trees were cut down. Take a look:

The reason the trees were cut down was to clear the site for the construction of a larger MetroBus area, so more can pull into the center rather than stay on 14th. Metro has talked about this for a number of years, but the process is moving forward now.  On Monday I inquired with Metro about plans, yesterday they posted information on their blog, see Metro Moves Forward With New Transit Projects, and sent me the text that will appear on the project page shortly:

Civic Center Transit Center Expansion

The Civic Center Transit Center is one of Metro’s busiest transit hubs and it presently lacks the space needed to adequately serve the number of MetroBus routes converging at this location. The location at 14th and Spruce Streets in Downtown St. Louis is served by MetroLink, 18 MetroBus routes and Metro Call-A-Ride service.

Metro secured federal funding to redesign the Civic Center Transit Center to more effectively accommodate more buses and to provide greater customer safety, convenience and comfort.

The expansion will include:

• 18 MetroBus bays
• 2 Call-A-Ride bays
• Space for 60-foot articulated buses
• Construction of a new building with
  • An indoor, climate-controlled waiting area
  • Public restrooms
  • Digital messaging boards
  • A security sub-station
  • Concessions

The design contract for the project was awarded to Arcturis Inc. on October 2013. The project is scheduled to be completed by next fall with construction expected to begin late summer or fall 2014.

To redesign the property for the expansion, it was necessary to cut down the bald cypress and oak trees. The trees were removed prior to April 1 so as not to affect migratory birds. Metro will plant the same number of trees at another location or make a donation to a local forestry project.

Here’s the proposed site plan:

This changes the flow for buses and pedestrians, after I’ve had a chance to absorb the proposed design I’ll share my thoughts in a separate post.

— Steve Patterson

Readers Prefer Public Transit Over Car Sharing & Taxicabs

In the poll last week I was trying to see if there was a preference among readers for an app-based service (CARmil, Lyft, Uber, etc) vs local taxicab. Just before posting the poll I changed the options, adding public transit to the mix. I very quickly regretted the change but it was too late.

Q: Next time you need to get from A to B (not in your own car), which type of service would you use?

1. Public transit 42 [56%]
2. App-based service (CARmil, Lyft, Uber, etc) 12 [16%]
3. Unsure/no answer 12 [16%]
4. Local taxicab company 9 [12%]

The app-based services did come out slightly ahead of taxicabs, but based on the totals I don’t think we can draw any conclusions.  I do have some thoughts on the topic though. While a few taxicab  companies have their own apps or are part of Taxi Magic, they’re boring by comparison. The local apps don’t simplify the payment process at your destination, one taxicab company we took last year handed us a credit card receipt to sign after swiping our card on their reader up front. Really? The other we took last year had credit card machines in the back and no paper receipt to sign, but we still had to get our card out. I used Taxi Magic once last year, which only required me to use the app on mu phone, but the driver made a big deal out of it.

In fact many drivers don’t like credit cards at all; companies take a bigger cut, are slow to pay, or something. Sorry, I’m the customer and I rarely carry more than $5 in cash.  I know a few former & current taxicab drivers, I support them in earning a living. But industries that don’t adapt to change will die off.

With the app startups I do worry about issues of riding with an unknown person using their personal vehicle.  I wonder how a whimsical taxicab company would do in St. Louis, shake up the establishment or struggle among the big players?

— Steve Patterson