Summary

A municipal government sponsored program to replace 10,000 of Mexico City’s taxis that are at least 8 years old with more efficient models. The program has currently replaced 3,090 taxis.

What is it?

A city government program to replace older taxis with more fuel efficient taxis. The municipal government, with the financial support of local bank Grupo Financiero Banorte, is able to provide 15,000 pesos to each taxi driver wishing to replace his old taxi with a new vehicle. The taxi driver can use the 15,000 pesos towards the purchase of a new 70,000 peso car. The remaining sum is paid via a bank loan, repaid by the driver over the course of approximately four years.

How does it work?

  • Mexico City has 103,000 taxis, which does not include the vast quantity of unregistered taxis known as “piratas.”
  • Because taxis account for 35% of transportation emissions, the municipal government decided to enact a program that would replace all taxis 8 years or older with newer taxis.
  • The municipal government set up a program, Programa de Sustitución de Taxis del Gobierno del Distrito Federal (Government of Mexico City’s Taxi Substitution Program), in conjunction with Nacional Financiera, Grupo Financiero Banorte, the Secretariat of Economic Development, Secretariat of Transportation and Mexico City’s Secretariat of the Environment.
  • The program’s goal is to replace 10,000 old taxis by 2012.
  • All newer taxis must be 4 doors and with a mileage of 12.5 kilometers per liter.
  • The municipal government agreed to subsidize 15,000 pesos for each new taxi.
  • A taxi driver can apply the 15,000 pesos (approximately $1,375 USD) towards paying for a brand new taxi that would typically cost approximately 70,000 pesos (approximately $6,420 USD).
  • The City government partnered with a local bank. The bank has agreed to grant taxi drivers loans/credits to pay off the remaining 55,000 pesos.
  • Nacional Financiera, a development bank, acts as the guarantor/trustee of this loan.
  • Taxi drivers pay off the loan in four years, paying 760 to 870 pesos each month (approximately 70 to 80 USD).
  • If for some reason the taxi driver does not pay back the loan, the government revokes the new car.

Next steps

The program has just completed its first pilot stage, replacing 3,090 taxis. In total, over 45,000 taxis have been replaced because many taxi drivers have acquired loans on their own, without government assistance. The municipal government will continue running its taxi replacement program as soon as it obtains the funds to do so. Mexico City will provide subsidies for another 7,000 new taxis.

Application

It is vital to work in partnership with other governmental organizations. Without the support of the municipal government, the Secretariat of the Environment and the Secretariat of Transportation, this project would not have been possible. Furthermore, the financial support of a bank is suggested. Bank loans and credits are necessary in order for taxi drivers to pay off the cost of their new car.