Disruptive technologies, like Uber and Lyft, are undermining the value of taxi medallions.
The New York Post is reporting that taxi fleets have lost between 10 percent to 15 percent of their drivers to app-based livery services.
As a result, the price of taxi medallions have dropped by almost 15 percent in the last four months after surging in the first half of this year.
According to Mitchell Reiver of the Melrose Credit Union -- a credit union that specializes in financing taxi medallion purchases, the price of taxi medallions has fallen from $1.05 million four months ago to about $850,000 on average.
The story further notes that the credit union is currently negotiating a medallion sale for $825,000. So, it appears that taxi medallions prices have not found a floor.
This plunge in taxi medallion prices should make credit union regulators nervous, especially with regard to credit unions that are overly exposed to this market.
I suspect these credit unions will be subject to greater scrutiny going forward to ensure that they do not pose a risk to the National Credit Union Share Insurance Fund.
In fact, NCUA in April 2014 issued guidance to credit unions that were engaged in taxi medallion lending or participated in these loans.
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Will be interesting to see how those credit unions fare (pun not intended).
ReplyDeleteThey've had a monopoly on a small subset of the business and never diversified. Made a lot of money over the years with an inherited business. Their customers had a monopoly.
Now, their customers may not have a monopoly.
Concentration risk?
Kuddos for being on this story very early on.
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