South Korea’s beleaguered ride-hailing service operator Tada will be spun off from its mother company SoCar as it struggles to keep its business rolling in the face of legal setbacks
SoCar’s board on Wednesday agreed to spin off its rental van-hailing service into an independent company on April 1. SoCar shareholders would hold equal percentage of shares in Tada after the demerger.
The move is to help Tada focus on its ride-hailing services and SoCar on its car-sharing platform, as well as drive new investment and strategic alliances for future growth, Tada said.
The decision comes after prosecution on Monday filed indictment on Tada`s illegalities, seeking a one-year sentence for Lee Jae-woong, chief executive of SoCar, and Park Jae-uk, head of VCNC, operator of Tada. The two now face trial on charges of running an unlicensed transportation business. Under local laws, private vehicles are prohibited from transporting passengers for money without a taxi license.
The new Tada will carry on its current operations, serving 1.7 million members on 1,500 vans with drivers in Seoul and the metropolitan area. It plans to introduce a range of new ride-sharing services and find ways to work with the public transit system in the long run, the company added.
VCNC CEO Park Jae-uk and Lee Jae-woong, chief executive of SoCar. [Photo by Yonhap]
“Becoming a stand-alone company is expected to broaden Tada’s business opportunities and draw more investment, which will help spur growth in the local mobility platform industry,” said Park Jae-uk.
“With Tada’s dynamic growth and SoCar’s steady expansion, we will work to create an entrepreneurial ecosystem that turns out many more unicorns,” Lee Jae-woong added.
Tada was launched in October 2018 by exploiting a legal loophole that allows rental vans with more than 11 seats to be legally leased with a driver. However, the National Assembly has set out to revise the vehicle law to restrict the passenger services of rental vans to tourism purposes only. If passed, the new laws are likely to jeopardize the future of Korea’s sole ride-hailing firm.
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]