100 minibuses repossessed as sector hits rough patch

Michael Shum

Around 100 minibuses have been repossessed after owners have failed to pay their loans in the past three years, according to an association leader.

Of the 1,000 minibuses in the city, half of them are currently not in service, said Hong Kong Taxi and Public Light Bus Association chairman Chow Kwok-keung, while around 100 have already been repossessed after the owners' loans ran into delinquency or default.

"The continuous rate hikes and the pandemic were to blame as these prompted the price of a minibus license to drop by 90 percent from HK$8 million to the current HK$700,000," Chow said, meaning the licenses turned into negative equity.

He added that the difficult business environment has made owners fail to afford their loan repayment.

"If the government does not roll out relief measures, some owners might give up on the industry as they find no motivation to continue paying the loans," he said.

This will further give rise to the number of minibuses being repossessed, Chow said, expecting the number of repossessed minibuses to continue to climb - exceeding 100 in the coming year.

Max, operator of social media page "minibus collections," which first unveiled the repossession wave, said banks are already in talks with minibus owners to discuss an alternative arrangement to settle their loans.

"That includes a remortgage or second mortgage of their properties to pay off their loans for the minibus license, or start a new mortgage for the owners with the remaining amount they owe the bank to alleviate their burden by reducing their monthly settlement," Max said.

He said people's traveling patterns have changed after the pandemic, and left the minibus industry with little room to develop.

"Red minibuses cannot enter new development areas like Tung Chung and Tseung Kwan O, and it usually takes three to four years for the government to approve a change in minibus routes, even if it is just extending the route to the next block," Max said.

He called on the government to step up the speed of its application approval to allow the industry to quickly adapt to the fast-changing environment.

Cheung Hon-wah, chairman of the Hong Kong Public Light Bus Owner and Driver Association, said the minibus business has declined by 50 percent over the past three years due to the pandemic.

The opening of new MTR lines did not help either, as minibuses took a hard hit in their operations in areas like Hung Hom and Kowloon City, Cheung said.

"This prompted the rental fees to dropped to as low as HK$400 per shift," he said.

"If owners still have over HK$4 million unsettled payment, HK$400 per shift will not be enough to cover their payment, and they have no choice but to default on payments."

Cheung added there are "some 10 minibuses that are facing this exact situation."

michael.shum@singtaonewscorp.com