License plate prices for taxis struck by rumors

For many years, taxi license plates have been an excellent investment especially in Istanbul. Hundreds of investors not necessarily related to the taxi industry have been buying, selling, or hiring license plates, but in the last few months of 2008 rumors that the Istanbul Metropolitan Municipality is going to introduce new registration requirements have irked investors and caused a drop in prices.

Taxi license plates are still a profitable investment, according to brokers active in the industry. One broker, who requested anonymity, said license plates were sold at around TL 350,000 or TL 400,000 at the "plate bourse."

"One still has the chance to buy a plate and rent it out for as much as TL 5,000 a month," he said. "But demand is waning. Rumors that the municipality is preparing to become an insider in the industry have forced a drop in prices." Â

Istanbul currently has around 18,000 taxi license plates and tens of thousands of drivers work in the taxi business. There are rumors that with a change in the relevant law, municipalities will begin issuing certificates to operate taxis for five years. As the market debates this claim, a Web site Tuesday said taxi owners were irritated and wanted to "sell their license plates as soon as possible," but as demand has fallen with the general economic climate, "the drop in prices is accelerating."

Far-reaching authorities
According to these rumors, all transactions will have to be communicated to the municipality, all taxi drivers will have to be covered by social security and new taxes will be introduced for hiring out license plates. But the municipality said two weeks ago that no work to this effect had been carried out and denied the rumors.

"Non-taxi owners, who we call 'foreign investors,’ have stopped buying license plates," said some brokers, speaking on the condition of anonymity. "The market is in a liquidity crunch. As license plate prices decrease, those who bought them in the last few months are disillusioned. Still, one can earn good money by hiring out license plates. The price of one plate has dropped to below TL 400,000 from TL 550,000, while they are being rented out for around TL 3,000 a month, down from TL 3,600. Even this is not enough to find renters. We think the municipality is going to make some new arrangements in the industry."

One license plate cost TL 100,000 in 2000, but the price skyrocketed to TL 580,000 in 2006. A few months ago, some transactions surpassed TL 600,000, but today they are at 2004 levels and buyers are disappointed.

Business halts at Otocenter
One of the biggest centers for license plate trade is the Otocenter in the Bağcılar area. As of Wednesday, plates were sold for TL 350,000. Speaking on the condition of anonymity, one trader said the global financial crisis was also affecting the plate market. "Investors are waiting and they do not want to engage in trading right now," he said. "Except for taxi owners or operators, interest in this trade seems to be over." The decline in purchasing power also means citizens are less likely to use taxis and this has affected the hiring of license plates as prices fell more than 30 percent in a few months.

Auto showrooms that engage in license plate trading are also having a hard time. One showroom on its Web site apologized to buyers for falling prices. Supply has surpassed demand considerably and because of this the spread between sellers and buyers has reached TL 50,000, according to the Web site. Those who bought license plates at the beginning of last year have lost more than TL 220,000 as of the first day of 2009.