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Old 25th April 2013, 11:54   #1
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Post Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

The scenario

My friend - Vinu bought an Innova 7 seater 1 year back for 10.97 OTR. He sold it for 10.95 after 1 year of usage as taxi.

The road tax he had to pay was 1,700 odd per year ( since it was a taxi )
He also got a refund of Rs. 34,000/- as exemption in excise duty, since he registered the vehicle as taxi.

So, in effect, his vehicle costed him 10.99 - 0.34 = 10.65 Lakhs
He sold it for 10.95 lakhs with a profit of 35,000 after one year!

During this one year, he also got a 45,000 per month contract from a Bank as well for hiring this car to run as a taxi !

Now, had he registered the vehicle as private vehicle, the vehicle would have been dearer by another 1.5 Lakhs.

Questions

Does this make sense ?
Is there any pitfalls in registering a vehicle as taxi ?

For me, it seems to be making a lot of sense to do it this way, since you can use it for generating revenue whenever you want to and even costs you less when you buy it. It's a win-win situation and doesn't seem to make sense to register the Innova 7 seater as a private vehicle. Correct me, if I'm missing something here.

Last edited by Technocrat : 26th April 2013 at 02:38. Reason: removed company name to protect Privacy, thanks
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Old 25th April 2013, 14:06   #2
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Default re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

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Originally Posted by amalji View Post
My friend - Vinu bought an Innova 7 seater 1 year back for 10.97 OTR. He sold it for 10.95 after 1 year of usage as taxi.
It's a little hard for me to digest !!

First of all, did your friend buy it new ? How much did he run it in 1 year and who bought it for 10.95 after that ? I suppose it was a 2.5 trim he bought.

Whoever was buying, was he fool enough to not check the current price of the new vehicle ?

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Last edited by Technocrat : 26th April 2013 at 02:40.
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Old 25th April 2013, 14:18   #3
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Default re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

^^

I think the point Amalji was making was missed. He was basically stating the OTR for Innova as Taxi is much lower than as a Pvt. Car as Pvt. Car Registration/Tax is higher than for a Taxi, also the Excise applicable if sold as a Pvt. Vehicle is higher.

The further question that I have is that the second owner would have to get the vehicle registered as a Pvt Vehicle and would have to then pay the Registration/Tax differential. This aspect is still not clear from the post.
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Old 25th April 2013, 14:29   #4
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Default re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

Remember there are many places (incl. entry to Delhi), many cantonments and also if you go interstate where toll/taxes have to be paid.
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Old 25th April 2013, 14:59   #5
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Post re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

Quote:
Originally Posted by Fiest@DuraTec View Post
First of all, did your friend buy it new ?
Yes, new.

Quote:
Originally Posted by Fiest@DuraTec View Post
How much did he run it in 1 year and who bought it for 10.95 after that ?
20,000 kms in 1 year
Someone from olx.in came and saw the vehicle the very next day after posting, and paid advance. Took the car within 3 days after paying the remaining amount.

Quote:
Originally Posted by Fiest@DuraTec View Post
Whoever was buying, was he fool enough to not check the current price of the new vehicle ?
Not so, because prices have increased for the same trim now.

Quote:
Originally Posted by ACM View Post
^^
I think the point Amalji was making was missed. He was basically stating the OTR for Innova as Taxi is much lower than as a Pvt. Car as Pvt. Car Registration/Tax is higher than for a Taxi, also the Excise applicable if sold as a Pvt. Vehicle is higher.
Exactly my point. The difference is 1.5 Lakhs for an Innova!

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Originally Posted by ACM View Post
The further question that I have is that the second owner would have to get the vehicle registered as a Pvt Vehicle and would have to then pay the Registration/Tax differential. This aspect is still not clear from the post.
He did not register it as a private vehicle, I guess. He continued using it as a taxi.

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Originally Posted by sgiitk View Post
Remember there are many places (incl. entry to Delhi), many cantonments and also if you go interstate where toll/taxes have to be paid.
That's one pit fall - the entry fee. And any idea, how much it would cost for an Innova taxi to enter another state - Tamil Nadu for example.
Any other issues that people can think of when registering it as a taxi ?

Last edited by amalji : 25th April 2013 at 15:01.
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Old 25th April 2013, 15:14   #6
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Default re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

Quote:
Originally Posted by amalji View Post
For me, it seems to be making a lot of sense to do it this way, since you can use it for generating revenue whenever you want to and even costs you less when you buy it. It's a win-win situation and doesn't seem to make sense to register the Innova 7 seater as a private vehicle. Correct me, if I'm missing something here.
Are you saying that for ones personal use, buy as a taxi and use it personally and if needed as a taxi? And you get the advantage on resale too after a year? Hmm..seems good, but what about the warranty? I'm sure vehicles registered as taxis have a lesser warranty.

Apart, I'm so surprised (and difficult to believe) to hear that someone sold a one year vehicle for a profit of 35000/-. What is the OTR price of the same car today? I mean, what is the benefit the second owner gets in buying a year old car?
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Old 25th April 2013, 15:19   #7
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Post re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

Quote:
Originally Posted by thoma View Post
Are you saying that for ones personal use, buy as a taxi and use it personally and if needed as a taxi? And you get the advantage on resale too after a year? Hmm..seems good, but what about the warranty? I'm sure vehicles registered as taxis have a lesser warranty.
That's another good point. Will check it out.

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Originally Posted by thoma View Post
Apart, I'm so surprised (and difficult to believe) to hear that someone sold a one year vehicle for a profit of 35000/-. What is the OTR price of the same car today? I mean, what is the benefit the second owner gets in buying a year old car?
Same car is 1.1 Lakh costlier as of today. Combine that with the 0 waiting period and hassle free nature of the Innova, it does make sense for the buyer.
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Old 25th April 2013, 15:39   #8
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Default re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

Quote:
Originally Posted by amalji View Post
That's one pit fall - the entry fee. And any idea, how much it would cost for an Innova taxi to enter another state - Tamil Nadu for example.
Costs approximately 1500 bucks for an Innova in most southern states. It is not just about the cost associated with the yellow board permit. It is also about the inconvenience. In some states such as Kerala/TN where tourist destinations are more in number, the entrance queue of non-resident vehicles waiting to get permits can go quite long. During weekends and public holidays, it will easily cause a delay of 2 hours waiting in the checkpost queue to buy your permit. For people travelling frequently between states, this entry fee thing is a major hindrance in terms of time and money.

Quote:
Any other issues that people can think of when registering it as a taxi ?
Societal perception issues, namely the 'status symbol' tag takes a huge hit. In fact it becomes non-existent in family / relatives / friends / colleagues' circles. As it is, the Innova has a taxi image in the market. Not many people would want to drive around in a yellow board vehicle, portraying the image of a taxi driver and inviting ridicule from near and dear ones, for being a miser trying to cut corners just to save a few bucks on road tax.

In a day and age where people spend lakhs of rupees on things as trivial as fancy registration numbers, I'm sure most people would rather spend the extra 1-2 L of rupees and register it as a white board vehicle to uphold their 'respectable image' in society. Just speaking from a general layman's perspective, no offense meant.

Last edited by KarthikK : 25th April 2013 at 15:44.
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Old 25th April 2013, 15:50   #9
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Default re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

^^

Actually if someone to be travelling in an Innova Taxi all the time would that not be of more snob value / prestige compared to owning an Innova? It would obviously cost a lot more to be hiring an Innova daily rather than to own it.

I think 1.5L savings if possible makes for a decent saving to tempt people to the other path. Not everyone goes for a fancy registration number and there are many who are driven by drivers (not self driven) and sit on the back seat of a base or base +1 spec vehicle as most comfort elements of higher varients just pamper the drivers.

Obviously this is just Tangential Thinking and how people will feel about it is anybodys guess.
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Old 25th April 2013, 15:59   #10
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Default re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

Quote:
Originally Posted by ACM View Post
^^

Actually if someone to be travelling in an Innova Taxi all the time would that not be of more snob value / prestige compared to owning an Innova? It would obviously cost a lot more to be hiring an Innova daily rather than to own it.
Well, I was referring to self-driven vehicles. If you are a solo driver driving a yellow board Innova v/s a solo driver driving an Alto, no prizes for guessing who is treated better at fuel pumps, service stations, valet parking at hotels, etc.

With unknown people on the road, yes, sitting in a chauffeur driven Innova gets you the image of a rich tourist visiting the city.

What I was referring to was that friends and relatives will obviously know that you deliberately registered it as a yellow board car to cut corners. Its a royal recipe for inviting the 'miser' tag among friends'/relatives' circle. I am just pointing out common Indian society mindset, nothing else.

Quote:
I think 1.5L savings if possible makes for a decent saving to tempt people to the other path. Not everyone goes for a fancy registration number and there are many who are driven by drivers (not self driven) and sit on the back seat of a base or base +1 spec vehicle as most comfort elements of higher varients just pamper the drivers.

Obviously this is just Tangential Thinking and how people will feel about it is anybodys guess.
True. I am not disputing the practicality or the cost-effectiveness of registering it as a Taxi. I'm just pointing out psychological and 'status quotient' after-effects of driving around in a taxi when you could have very well bought the white board version for just a lac more (when spending 10L+ on a car). Whether one specific buyer is influenced by others' perceptions/comments or not is a different issue. I'm saying majority of the buyers will be concerned about that 'image' aspect, at least here in India.

Last edited by KarthikK : 25th April 2013 at 16:23.
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Old 25th April 2013, 16:01   #11
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Default re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

^^

Agree Agree, driving down to a petrol pump or outside a hotel while driving a yellow board innova and dressed in a white shirt even if from Raymond does not seem to be a great Idea.
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Old 25th April 2013, 16:26   #12
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I once had this idea myself but for high end cars like beamers and mercs that otherwise come to us at a landed price of double of what they cost in the US. prime culprit being the customs duty. If one imports it under a tourist licence, one doesnt need to pay customs or excise and only obligation is to maintain a roster for plying the vehicle as a taxi and using it for that purpose too plus applicable licenses and permits for plying in various RTO jurisdictions. Imagine this scenario - the driver drops you to office at 9, from 10-5 the driver serves taxi requirements of high end hotels that need such vehicles and at 6 the driver hands you the car at your office or drops you home. Then the car is yours. Earn from the leasing out and recover money in less than 2 years! Better still, get a national level permit (easier said than done though) and drive it out on holidays too. Maybe some day in life I will get the spare cash to try out this route 😊.
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Old 25th April 2013, 16:41   #13
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Default re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

Yes, it is cheaper to buy the vehicle in yellow board.

BUT: Is it worth it for personal use?

Considering:
  • You need a badge to drive it, so every one wont be able to drive it.
  • You will need to pay entry fees/tax at almost all borders
  • Yellow board attracts more hassles at check posts.
  • Go and pay tax every year.
  • Reduced resale value
  • And the obvious lack of snob value.
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Old 25th April 2013, 19:30   #14
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Default re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

Quote:
Originally Posted by KarthikK View Post
Well, I was referring to self-driven vehicles. If you are a solo driver driving a yellow board Innova v/s a solo driver driving an Alto, no prizes for guessing who is treated better at fuel pumps, service stations, valet parking at hotels, etc.

With unknown people on the road, yes, sitting in a chauffeur driven Innova gets you the image of a rich tourist visiting the city.
+1 to karthik. How about buying a 50lacs + Merc and run it as a Taxi? Would you like to be called as a Driver or an owner? What will the common passerby think if you wear an Armani sitting at the driver's seat and still your vehicle sports a yellow board? Choose your pick.


Quote:
Originally Posted by KarthikK View Post
What I was referring to was that friends and relatives will obviously know that you deliberately registered it as a yellow board car to cut corners. Its a royal recipe for inviting the 'miser' tag among friends'/relatives' circle. I am just pointing out common Indian society mindset, nothing else.
In addition you will be called as cunning, a person who can even compromise with his image just to save some money. Your image will go down the drain.

Quote:
Originally Posted by KarthikK View Post

True. I am not disputing the practicality or the cost-effectiveness of registering it as a Taxi. I'm just pointing out psychological and 'status quotient' after-effects of driving around in a taxi when you could have very well bought the white board version for just a lac more (when spending 10L+ on a car). Whether one specific buyer is influenced by others' perceptions/comments or not is a different issue. I'm saying majority of the buyers will be concerned about that 'image' aspect, at least here in India.
Truly practical. If the above factors are non existing, this is best possible way to save some lacs (atleast in Bangalore). But It does make sense to get it registered as a cab and then use it as a Cab. The OP makes a lot of sense but what do we really want. A cheaper car or a cheaper image?
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Old 25th April 2013, 20:32   #15
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Default re: Is buying a Utility Vehicle as a taxi cheaper than as a private vehicle?

Above all....is it right to do so? Is it not cheating - registering a vehicle as a taxi and then using it for personal use?
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