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Monday, July 21, 2014

DeSoto Cab Might Leave Taxi Game to Compete with Uber, Lyft

Posted By on Mon, Jul 21, 2014 at 4:50 PM


DeSoto Boss: "I'd be a big hypocrite ... But I have to survive."

It's July, smack in the middle of tourist season, supposedly one of the hottest months of the year for San Francisco taxis.

And yet, at any given time of day, you'll see about a quarter of every cab company's fleet idling in its lot.

That's a sad state of affairs, says Hansu Kim, co-owner of DeSoto Cab Co. and vociferous critic of predatory practices within the industry. He's long bemoaned the liberties bestowed on so-called "TNC" services like Uber and Lyft, which seem to operate in a deregulated environment. He also decries new rules for state-regulated livery vehicles, which allow any driver to apply for a limo license, slap it on an ordinary Prius, and turn the car into an on-demand "rideshare" service.

"Here's my dilemma," Kim says. "I see a driver pool that is shrinking fast. I see the city has a completely deregulated industry. And I see 'limousine' vehicles acting like taxi cabs." Kim adds that because he's playing by a stricter set of rules, the competition is threatening to put him out of business.

So now he's adopted a different credo: If you can't beat 'em, join 'em.

"I'll give my medallions back to the city and put TCP [charter transportation] licenses on all my vehicles," he says. That's $250 per cab, as opposed to $2,500 per medallion, per month."

The $2,500 per month-per cab cost difference translates into a savings windfall for DeSoto. Since DeSoto currently operates 200 cabs, that's nearly $6 million over the course of a year. (The cost of medallions may decrease to $1,800 per medallion per month in September, Kim says, but even then, he'll come out winning.)

By recasting himself as a limousine sedan service, Kim would also be regulated by the state, rather than the city. His company would be based in San Francisco, but his drivers could pick up fares in surrounding cities -- like Oakland or San Mateo -- with impunity. If they tried that as regular municipal cab drivers, they'd get cited by the SFMTA.

Kim says he'd use the same DeSoto brand name and the same two-toned blue color scheme. He'd gut his fleet of taxi lights and meters. He'd become a livery service that looked like a taxi fleet.

He believes that longstanding brand recognition will help DeSoto perform well in a deregulated market. "I will never go out of business," Kim insists. "I will just transform."

He may transform in as little as 90 days. And he thinks other companies will follow suit.

"I'd be a big hypocrite," Kim says, "because I don't believe in this loophole. But I have to survive."

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About The Author

Rachel Swan

Rachel Swan

Rachel Swan was a staff writer at SF Weekly from 2013 to 2015. In previous lives she was a music editor, IP hack, and tutor of Cal athletes.

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