UBER A 'SIGNIFICANT' CHALLENGE FOR CABCHARGE WITH DRIVERLESS CARS ALSO ON THE WAY
Written on the 21 November 2017 by David Simmons
THE chief executive of Cabcharge (ASX: CAB), Andrew Skelton, has labelled the impact of Uber on the taxi business a "significant" challenge.
However, after two years of declining turnover in Queensland, the company has finally posted a 3 per cent rise in October.
"Our industry is being challenged in a number of ways, most significantly by regulation and Uber," says Skelton.
"We are fortunate that the taxi industry serves passengers seeking paid personal transport, and that the demand for paid personal transport is growing."
Skelton also said at Cabcharge's AGM that driverless taxis are on their way to Australia, but not in the way we think they will be for a number of years.
Skelton says driverless taxis will be operating in Australia by 2026, but they will "co-mingle" with thousands of traditional cabs that will still be on the roads with a driver for decades to come.
"They are going to co-mingle. Driven taxis don't suddenly stop," says Skelton.
Uber recently signed a deal with car manufacturer Volvo to buy up to 24,000 Volvo SUVs with upgradable driverless software installed. Uber intends to take delivery of the vehicles between 2019 and 2021.
Despite recent success with fare turnover around the country, Uber still poses a threat to Cabcharge.
Cabcharge reported a $91 million loss in the 2016/17 financial year, primarily thanks to losses on the sale of its stake in a UK taxi account and booking service.
However, the company anticipates revenue will return to double-digit growth in FY18 as the acquisition of Yellow Cabs in Queensland and heavy investment into new technology begins to pay off.
The Yellow Cabs deal has added 1,200 cars to its fleet, and Cabcharge has added 125 cars in South Australia and Victoria since the end of June and an additional 320 cars are set to be added in those markets, according to Skelton.
"We are determined to maintain our new momentum," says Skelton.
"We have a strategy that is working, fewer distractions, and a deeper spread of activities across the value chain, no debt, and we are continuing to make the investments in technology and marketing that will grow our revenue in the years ahead."
Shares in the taxi operator have been falling this year, and have lost 50 per cent of their value since March.
Business News Australia
Author: David Simmons