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Matatu business
Rank: Member Joined: 10/1/2007 Posts: 232
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@ kigee. The rate of depreciation on psv's is very high. Ie 30.% pa. The matter is worsened by bad roads especially in western and nyanza. To compensate,new vehicles charge higher fares. Bright proprietors then discard the units before the cost of maintenance becomes too un economical. The next owner of the used unit will spend a lot of time and money maintaining the junk. If he does not have deeper pockets he gets grounded. This is why citi hopper is not keen to service routes with rough roads.
Osama bin Laden
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Agreed,@tmatekwa,they say you should sell the matatu after three years - and by that time you get back about one third of what what you paid for it. This is the cost that many people in the business don't anticipate. As a result,they milk their matatus dry by investing in dormant plots of land etc. Three years down the road,they need to buy a new vehicle and they can't raise the necessary funds...especially after factoring inflation. By the way,have you noticed that all matatus with sh300k worth of a music system are owned by new comers? And after a short while,the system breaks down [due to abuse] and there is no money to repair/replace it? Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 7/12/2008 Posts: 3
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@tmatekwa,mukiha
Sorry for being a pain but do you think installing the fleet management system in matatus can improve tracking and increase profitability in any way i.e. would this avoid lies such as 'tulishikwa na tukawekwa na polisi kwa masaa sita leo' or 'tulishinda garage'
How do you do the tracking yourselves?
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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@Orbit: I doubt whether a fleet management system (presumably,GPS) would improve profitability - i.e. return on capital employed. Find out the cost and then ask yourself whether the additional profit earned (not the extra sales!) are justifiable. Then also ask yourself why Citi Hppa,DoubleM and KBS don't use the system... Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 7/12/2008 Posts: 3
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Well,this GPS fleet management system is a fairly new idea and not many operators know about it or have tried yet. The initial one-off cost is about 30k, while the monthly charge is about 3k (I stand to be corrected on cost).
I still feel it can work wonders,especially for small investors with 8-5 jobo and cannot afford to employ full time managers.
As for City Hoppa,KBS,etc,these have professional managers who track and manage the vehicles constantly,hence no need for GPS
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Rank: Member Joined: 10/1/2007 Posts: 232
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Stoic fleet management? Yes. It will reduce garage time cheating,operating on unlicenced routes,miss use of vehicle for personal matters,falsified trips and falsified arrests. However the device is not a cure all on its own. You must have one authorised garage for repairs,an authorised petrol station with records of fuel consumption,a very minimum wage since they will help themselves to some of your money anyway,and a daily target. Above all calculate some goodwill between you and your employees. This in itself promotes a sense of belonging,self esteem and job security hence reducing large scale diversion of revenues. However the cost of the gprs system does not make economical sense to single unit owners.
Osama bin Laden
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Rank: Member Joined: 1/25/2007 Posts: 39
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hi guys,
i am also interested in venturing into this bsn and what i'd like to know the best insuarance company for matatus and their rates and the taxes involed with this business. i also would like to know if you buy a new mat how often is it advisable for it to be serviced. also i am thinking of attaching mine to a sacco what is your opinion and what should i know about these saccos and which do you reccommend. with respect tho the buses which is the best company to attach ones bus to ( citi hopper,kbs or express connections). thanks.
slimboss
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Rank: Member Joined: 6/19/2008 Posts: 1
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Hi My friend;
Instead of waiting for over six months for your mat to be build,lets talk on a deal of a 51 seater (New),only operated for six months in Nairobi under citi hopper.
Red eyes
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Rank: Member Joined: 7/12/2008 Posts: 3
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Red Eyes,
Why are you are planning to dispose your new 51 Seater yet you know we all need to make coins elsewhere so we can then invest in the good old NSE.
I request that you share your experience(s) in that biz, esp to help those who want to get into it.
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Rank: Member Joined: 8/3/2008 Posts: 1
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Guys,what do you know about Mololine? I'm made to understand theft chances are slim,since all passengers are issued receipts plus as the owner you know exactly how many trips your mat has made to Nairobi - Nakuru vice-versa. Any info on this is highly appreciated.
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Rank: Veteran Joined: 6/11/2008 Posts: 892
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Hi Mololine and Meru shuttle are good lines you can pursue. I am currently in the process of pursuing one after I realized that with an Office job,it will break me to juggle between matatu and the office. I advice you to pursue one. I am more than a conqueror in Christ Jesus For in him (Jesus) we live and move and have our being-Acts 17:28
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Rank: Veteran Joined: 5/18/2008 Posts: 796
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Talking about matatus.. What's your take on the article in yesterdays Nation (Sunday) in the lifestyle magazine where people talk about their week. This weeks writer was talking about an extortion scheme running on route 33 where a new owner has to pay 15,000 to the 'elders' as some kind of initiation fee.
How often does this happen? Are Mololine and the rest of the matatu managers subject to this kind of extortion? Anyone with info on the Nairobi - Kinoo route?
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Rank: Member Joined: 10/1/2007 Posts: 232
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Most routes that have sacco's that man the terminus are subjected to some form of joining fee. They argue that by organising the operations the owners get better returns and are protected from destructive competition. The sacco's have BOYS who enforce the rules and collect daily levies from which they are paid. Part of the fees are used to pay for rented premises,salaries for boys,protection fees,and some form of dividend at the end of the year for registered members. Sacco's reduce the work load for traffic cops and local authorities by enforcing basic traffic rules.They also perform basic managerial tasks eg banning errant matatu crews from being employed in any other psv on the route,collecting daily returns on behalf of the members,negotiating collectively on fuel,spares etc,stipulating standards of road worthiness to be observed by vehicles. The kenya bus management is a legalised form of cartel. Joining fee @ 50k. Daily commissions @ 2%. Towing services,fueling at owners cost,supervision of crew and collecting daily returns. Perhaps the government should transform the sacco's into route management committees with a legal mandate to maintain sanity on the roads. In his zeal to transform the industry,mr michuki miss understood the enforcement role played by these sacco's,banning them all together. Mr. Mwakwere did have a bright idea when if proposed eradication of individual ownership of psv's. But little has been done so far towards the same. I do hope that the minister of transport do visit this forum.
Osama bin Laden
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Rank: Member Joined: 2/8/2007 Posts: 625 Location: Nairobi
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Hi Guys, I have a mat operating for the last 4 months but i would like to sell it. Its one of the best ' manyagas' in langata and a KBB year 2000 with nice reams,nice attractive colour and dezines,a big screen,loud horn and full music .Please let me know if anyone is interested please call 0723481813. The best is yet to come! The future belongs to those who believe in the beauty of their dreams.
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Rank: Member Joined: 10/1/2007 Posts: 232
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@ nobby. Would 750k be a good price?
Osama bin Laden
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Rank: Member Joined: 2/8/2007 Posts: 625 Location: Nairobi
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Hi @ tmatekwa, 750K would be very low,that's the price i would sell it at after 18 months if its still in good condition. to be hornest i am looking at 1.1m negotiable. Lets look at it this way,a new nissan direct from japan will cost you about 980k if you in the kenyan market a toyota will be about 1.2m but this still do not have seats,speed governer,no colour or attractive dezines,no music,no TLB,no blarring horns,no alloy rims,etc.It cost me over 250k to put these add ons after the landed cost. By the way my cell fone number is 0721481813 and not 0723481818. just get in touch if you are interested. The best is yet to come! The future belongs to those who believe in the beauty of their dreams.
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Rank: Member Joined: 7/22/2008 Posts: 851 Location: nairobi
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@ nobby. Tlb is non transferable. The police are currently cracking down on multi colored psv's. Audio and video systems are being removed by the police. Big horns are also outlawed.
The cunning of the Buffalo
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Rank: Member Joined: 2/8/2007 Posts: 625 Location: Nairobi
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@ murenj,an attractive colour does not necessarily mean its multicolour,TLB and advance tax is only about 11k,and what police are cracking down on is loud music and not just music,infact we have a permit from the music copyright sociery of kenya to play music.The amout i am quoting is the actual value of the van after the bear essentials have been added.On the other habd it depends what kind of matatu you wold like to operate and route. The best is yet to come! The future belongs to those who believe in the beauty of their dreams.
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Rank: Member Joined: 10/1/2007 Posts: 232
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Wishing you the best of luck nobby. Sorry. But I am a hard bargain hunter.
Osama bin Laden
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Rank: Member Joined: 7/3/2008 Posts: 12
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mat business is good,trust me. I have been there and can tell anyone there is money. However,personally am pulling out. My reasons,my advice. One I got there with an old mat,maintainance costs have been high in most of the cases offsetting income. If u r unlucky gari 'noks' and you spend like 25k to 70k depending on make/model etc... Plus mat mzee itakuliwa sana na crew on pretext imeharibika,polisi,etc Thus I advice a new vehicle. New mat will ensure a constant stream for like 6-8months before anything major by then you will be a float with enough cash for all eventualities and resale value still high. Two,you need close management..... if you entrust it to your crew umeungua! why lie? u trust a hungry fellow with your money. Else employ a manager to run after it and agree on revenues...this not to substitute for your inspections. Third,kuwa na enough cash reserves to ensure uptime ya gari iko over 80%. sio gari inaenda garage inashida huko ukigather ndooo. isikuwe pesa ya dinga ndio maposho ya jioni.... utakwama.. Else I got my Shark AQ... anyone out there interested.... gari in good shape plus music... operating. I will be coming later to the business when I'm available for it he who fights himself is a great man The market, like the Lord, helps those who help themselves. But, unlike the Lord, the market does not forgive those who know not what they do. - Warren Buffett
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