JOHANNESBURG - Disgruntled taxi-owners are accusing SA Taxi of ripping them off by financing refurbished vehicles at up to double their retail value.
But the niche financial services provider says they’re not guided by the so-called book-value of the vehicles.
The company says it determines value based on potential earnings and the cost to refurbish them.
Transaction Capital -- SA Taxi’s JSE-listed parent company -- posted an 18 percent increase on headline earnings in the last financial year.
A study of a sample of contracts reveals that SA Taxi finances refurbished vehicles at up to double the so-called book value.
They are sometimes more expensive than the cost of a new vehicle but SA Taxi has defended this, saying on average they spend about R140,000 to refurbish a taxi.
“A minibus taxi is an income-generating asset which means it has the potential to appreciate if it is well taken care of," said Maroba Maduma, SA Taxi communications executive.
"What happens is, as we get that vehicle in, it’s not necessarily at that book value that we have so far spoken about.
"However what SA Taxi also does is, each of these vehicles, as they come in, has their damages from a mechanical perspective and a panel perspective. So we re-invest in the refurbishment of these vehicles.”
Santaco, which bought a 25 percent stake in SA Taxi in 2018, says they don’t know how the business determines the value of the vehicles.
“We are going to investigate, probably through our structures and in particular affected operators but also parallel to that we will engage with SA Taxi finance through the instrument that on our behalf manages the shareholding which is our business division called Taxi Choice,” said Santaco spokesperson Thabisho Molelekwa.
SA Taxi denies that it operates a monopoly but there are very few finance providers willing to take the risk in a tough sector.
While the company insists its contracts comply with the National Credit Act, this provides little comfort for operators stuck with faulty vehicles and significant debt to service.