Tuesday, June 3, 2014

NYC Taxi Medallion Prices Have Flatlined for Last Year After Rising 5X the S&P500 from 2004-2012. Is it the Uber Effect?

Mark Perry writes:
This is an update of a CD post from about a month ago. The chart above shows monthly NYC taxi medallion prices for: a) corporate and b) individual medallions from January 2004 to May 2014, based on updated data from the NYC Taxi and Limousine Commission. For the first time in more than a decade, individual medallion prices have been flat at $1.05 million for the last 12 months. Corporate medallion prices haven’t increased for the last 13 months from $1,320,000. Although corporate medallion prices did experience a similar long period of stagnation at $1 million in 2011-12, individual medallions have steadily increased in value almost every month since January 2004 before hitting the $1.05 million plateau last June. In contrast, individual medallion prices were appreciating annually by 14.4% in the nine year period between January 2004 and December 2012, which was almost five times greater than the 3.0% annual return on the S&P500 over that period.

Q: Is this the Uber/Lyft/Sidecar effect that makes NYC taxi medallions less attractive now that the taxi cartel is facing competition? Time will tell, but it would make sense that the presence and popularity of app-based ride-sharing services like Uber and Lyft, would have to depress the value of a NYC taxi medallion now that the traditional taxi cartel is being challenged and consumers have options that are frequently cheaper (for UberX 26% cheaper on average), better, faster and more convenient.
Read Mark Perry's interesting personal experience with Uber here.

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