Next, taxis are not required to undergo roadworthiness inspection as frequently. For ComfortDelGro which maintains an adjacent business of vehicle inspection, this move might reduce intersegment revenue but Jaiswal believes this will still help translate to lower taxi operating costs.
Local taxi operators are set to benefit from a series of proposed changes to how they operate. The government, as part of its bid to help address the post-pandemic shortage, announced on March 5 plans to allow taxis to be used for up to 10 years instead of implementing the eight-year lifespan cap. Operators are supposed to pass on net savings to the drivers in the form of lower rental but the net effect is likely to be positive for operators too.
“While the timeline for implementation has not been finalised, we view them as positive for the taxi industry and especially for ComfortDelGro (SGX:C52
) , says RHB Bank Singapore’s Shekhar Jaiswal, who has kept his “buy” call and raised his target price from $1.60 to $1.65.
