Five Reasons Why the Taxi Industry is So Competitive


Taxis have become an essential transportation method in the country. They first started in major cities such as New York and Chicago but have now spread to smaller towns and rural areas. It used to be a niche market explicitly aimed at high-income earners. Now, almost anyone can use a taxi daily. However, the taxi industry is one of the most competitive. There are several reasons for this. If you are considering entering the taxi industry, you must be aware of the competition you will be up against. Keep reading to learn more.

Low Barrier To Entry

One of the reasons why the taxi industry is so competitive is that the barriers to entry are relatively low. As a result, new companies can easily set up shop and start offering taxi services. This increases competition and makes it harder for existing companies to maintain their market share.

Multiple Players

Another reason the taxi industry is so competitive is that there are a lot of players in the market. It’s estimated that there are about two million taxi and limousine companies in the country. With so many companies vying for business, it can be hard to stand out.

Tight Margins

Another reason why the taxi industry is so competitive is that margins are tight. This means there is little room for error regarding pricing and other aspects of a taxi business. To succeed in this industry, you must ensure that your costs are well-controlled and that you offer competitive prices.

Low Customer Loyalty

Due to the nature of the business, it can be hard to build customer loyalty in the taxi industry. This is because people usually only use taxis when needed and are not likely to develop a long-term relationship with a particular company. As a result, companies have to work hard to win customers over each time they need a ride, which can be difficult and expensive.


Finally, technology is changing the taxi industry’s landscape, making it even more competitive. For example, ridesharing apps like Uber and Lyft have made it easier for people to find a ride, leading to increased competition for traditional taxi companies. The ridesharing industry is now worth over $80 billion, competing with the taxi industry. In addition, self-driving cars could one day drastically reduce the need for human drivers, which would also cut into the demand for taxi services.

As you can see, there are several reasons why the taxi industry is so competitive. If you are considering starting a taxi company, you must understand what you are against. Additionally, try out these five tips to help you succeed in the industry.

A professional taxi driver on the road

Taxi Upgrades

Many taxis still sport the old-school yellow or black exterior and a basic interior. However, consider jazzing up your taxis by adding these three upgrades to your vehicles:


Taxis with unique detailing can help you stand out. Consider partnering with a local auto detailing company. They can choose the right colors, graphics, and designs to give your taxis a unique look. However, before doing that, you should review taxi regulations in your state. Certain states, like New York, require public taxis to be yellow.

Wi-Fi or charging stations

Riders appreciate the convenience of being able to access Wi-Fi or charge their devices during their ride. Adding these features can make your taxis more attractive to potential customers.

Comfortable seating and amenities

Consider installing comfortable seats and adding amenities such as water bottles, tissues, and mints for riders’ convenience. These small touches can go a long way in making your taxi company stand out from the competition.

Exceptional Customer Service

In a competitive industry like the taxi industry, providing exceptional customer service can help you win repeat business and attract new customers through word of mouth. Make sure all drivers are friendly, polite, and helpful to riders. Consider offering amenities like complimentary bottled water or mints. Promptly respond to any complaints and take action to resolve them.

Incentives for Repeat Customers

Offering incentives for repeat customers can help encourage loyalty. This could be as simple as a punch card system where they receive a free ride after a certain number of rides or special discounts for frequent users.


Partnerships with local businesses or events can also help attract new customers and increase business. For example, offering discounted rates for attendees of a nearby concert or partnering with a hotel to provide transportation for their guests.

The taxi industry is highly competitive, but by implementing these tips, you can set yourself apart from the competition and attract customers. Good luck on your journey in the taxi industry!

About the Author

Scroll to Top