Wuhan authorities have promised a thorough investigation into the running of the city's taxi fleet, after a China Central Television broadcast on Sunday claimed most of the cabs were being run without the safest brakes available, and that vehicles were being sold by companies to taxi drivers at vastly inflated prices.
Officials in Central China's largest city confirmed that most of the 13,000 Elysee-brand taxis on its roads had been put into service without an anti-lock braking system, or ABS, but said such a system is not mandatory in taxis by law.
The TV program claimed that vehicles were being sold for as much as 40,000 yuan ($6,400) higher than the normal market price.
Dongfeng Peugeot Citroen Automobile Co, the Wuhan-based carmaker of the Elysee-brand vehicles in the province, posted a notice on its website promising to offer free checks and repairs to taxi owners of vehicles without ABS beginning on Dec 3.
The Wuhan municipal government announced at a news conference on Thursday that all the 12,600 taxis without an ABS will be replaced by new ones by the end of June next year.
The new cars will be chosen through an open bidding system to ensure fairness, said Chen Youxiang, deputy director of Wuhan's transport commission.
One driver, who has been driving taxis in Wuhan for a decade, told CCTV: "The braking system on my car doesn't work well, especially on rainy days."
The driver, who only gave his surname as Xu, said he replaced his old car with the new Elysee-brand taxis in September last year.
"I hadn't had an accident before then, but three rear-end collisions happened after I started to drive the new car," he added.
Although new Elysee-brand cars sell for around 70,000 yuan ($11,200), Xu said he paid 136,000 yuan for his car, and still has to pay another 2,890 yuan a month to his taxi company.
Another taxi owner told CCTV that they have virtually no choice about which types of new car they can buy, and often have to accept a car even if it has problems.
Chen said taxi drivers in Wuhan pay between 120,000 yuan to 150,000 yuan for a new Elysee-brand car, but the payment includes the price of the car and a contract fee.
In addition, taxi companies charge about 3,000 yuan a month to drivers.
An owner of one taxi company in Wuhan said the payment goes to the account of the city's taxi management division, which is affiliated with Wuhan's transport commission, but Chen denied this.
"Not a single penny goes to the account of the taxi management division," Chen said.
Xue Hongwen, director of Wuhan's supervision bureau, told the news conference that the government is investigating the purchasing procedures and will make its findings public once they were complete.
Yang Shouxin, a professor in economics law at Zhongnan University of Economics and Law, said: "The malpractices exposed in the program, such as the government designating specific types of car as taxis, represent a government monopoly.
"Many local government interests are involved in making such regulations."
He said the reason that most taxis in Wuhan are the products of Dongfeng Peugeot Citroen Automobile Co is that the Wuhan government wants to support the development of its local enterprises.
"This kind of monopoly doesn't only exist in the taxi sector in many cities. It also exists in many other sectors such as oil and power industries," he said.
Regulations for taxi management issued by the Beijing government also stipulate that taxi operators must use cars permitted by the government.
"There are three to four major brands of taxi in Beijing, including those produced in Beijing," one taxi driver, who asked to be anonymous, told China Daily.
He said he pays his company 5,175 yuan a month, and clears about 4,000 a month.
Yang added: "It is right for the government to improve the management of the taxi sector.
"But monopolies should be eased as they interfere with fair competition in the sector and can result in harmful consequences such as the safety hazards being exposed in Wuhan.
"Market-oriented policies should be increased in these heavily monopolized sectors, which is a challenge for the government," he said.
Contact the writers at email@example.com and firstname.lastname@example.org
Tian Jingwen in Wuhan contributed to this story.
'Boeing Dreamliner riddled with errors
HK tops China City Competitiveness Ranking
China's electric rail mileage ranked world's first
10th China Int'l Automobile Exhibition concludes
Harbin-Dalian high-speed railway starts operation
New wave of communication tools
Alibaba's 2012 transaction volume hits 1 trln yuan
China's savings rate world's highest
Shanghai Center Tower to rise over 400m