S. Korea’s car-hailing market suddenly heats up with big and diverse choices

2020.10.16 12:52:20 | 2020.10.16 12:52:48

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Ride-hailing service suddenly heated in South Korea after it was feared to have been killed with the exit of van-hailing Tada and legislation banning unlicensed chauffer-driving commercial business.

Socar, the country’s largest car-sharing service provider, will launch cab-hailing service Tada Light at the end of this month in a stunning comeback after its van-hailing Tada Basic service was kicked out of the market due to the government’s ban on car-sharing service using rented cars and chauffeurs amid strong opposition from taxi drivers.

The company will start the franchise taxi-hailing business with 500 units of licensed taxis, the minimum requirement set by the Seoul City government, and gradually expand the number of cars and service areas, it said. Based on Tada app operated by its subsidiary VCNC, it plans to provide a variety of services such as flexible fare system that calculates the cab fare by the customers’ location information.

Tada Light drivers are all full-time workers of the company who will receive monthly salary plus incentives based on the customer ratings, and they don’t have to pay a certain amount of money to their companies, an official from Socar said. The drivers are also covered by four employment insurance policies and guaranteed retirement compensation.

The country’s leading wireless carrier SK Telecom is also strengthening its mobility business with a plan to spin off the business and step up cooperation with U.S. ride-hailing giant Uber Technologies Inc.

The company announced in a disclosure on Friday that its board of directors approved the plan to set up a new mobility business entity by splitting off its mobility business unit operating navigation platform T map and cab-hailing service T map Taxi. The new company provisionally named T map Mobility Co. will begin operation on Dec. 29.

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SK Telecom said in a press release that T map Mobility will establish a joint venture with Uber to drive growth in the e-hailing market in Korea. It also aims to grow the new company currently valued at 1 trillion won ($$873 million) into a 4.5 trillion won worth business by 2025.

Since the revision to the passenger transport service act passed the National Assembly in March, mobility startups have been rushing to the franchise cab-hailing market by using licensed taxis due to the business advantages of rapid scaling and low costs.

Transportation franchise business refers a business that provides standardized transportation services by hiring licensed taxi drivers or companies. A franchise business must disclose business information to recruit franchisees.

KST Mobility and Kakao Mobility are the current industry leaders. They have already secured more than 10,000 units of licensed taxis. Kakao Mobility currently runs 10,300 Kakao T Blue cabs and KST Mobility operates 10,600 Macaron Taxis.

Startup Kornatus that launched Banban Taxi Green last month with a fleet of 200 in Jeonju will add 500 in Seoul by the end of this month and increase its fleet to 1,000 by the end of the year. The company pledged insurance coverage for Covid-19 infection for both drivers and customers for the first time in the industry.

42dot, a startup sponsored by Hyundai Motor and Kia Motors, also reported its business information to the country’s Fair Trade Commission in March to launch a cab-hailing business.

By Oh Dae-seok and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]