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November 19, 2019

Mobility platforms rush to join forces with taxi companies

PUBLISHED : August 05, 2019 - 22:19

UPDATED : August 05, 2019 - 22:26

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Following the recent measures unveiled by the government to resolve the conflict between the taxi industry and mobility platforms last month, Kakao Mobility and VCNC are rushing to secure what have become much-needed resources -- taxi companies and licenses.

While industry players are still awaiting detailed guidelines, these companies are scrambling to make up for the lost time and opportunities. 

Related:
Mobility firms disappointed with new regulations on ride-hailing services


Kakao Mobility is acquiring a taxi company that has 90 taxis for about 70 million won ($57,650) per license. It is also mulling to launch a new service with 12-seat vehicles that might be a direct challenge to Tada.

“It’s one of the ideas we are considering to satisfy our customers,” a Kakao Mobility official told The Investor. “If we do launch such a service, we will use vehicles with taxi licenses just like van taxis,” the official added. “There have so far been many suggestions. Once we complete due diligence of the taxi company, we expect to try out new services combining IT and platform technologies.”

Some speculate that Kakao will take over more taxi companies to secure the minimum requirement of 300 vehicles in order to operate as a platform provider.

On July 17, the Ministry of Land, Infrastructure and Transport unveiled new regulations that effectively made all new ride-hailing services acquire taxi licenses. While the government did relax the rules for existing taxi franchises or intermediation services, it limited the total number of cab licenses to 250,000 while requiring cab-hailing services to either run on such licenses and cars of their own instead of rentals.

This has made it difficult for startups like Tada to continue operations. Tada provides a ride-hailing service with more than 1,000 registered 11-seaters that are rented out. The drivers are mostly freelancers without a license to drive cabs.

Now, Tada is seeking to partner with a taxi company. To run its premium services involving luxury cars called Tada Premium, the company said its potential partner company may convert some of its regular licenses.

A spokesperson for VNCN, the operator of Tada, told The Investor that this may is a possibility, but declined to comment on the number of premium cabs to be deployed.

The local taxi industry had opposed all ride-hailing and ride-sharing services from the start, including Tada. Kakao Mobility had been forced to temporarily halt its ride-sharing service in the face of three suicide attempts by taxi drivers.

“While startups are being held up by regulations, companies with money can expand quickly which is worrisome,” an industry source said on the condition of anonymity. She added that under the current regulatory environment, there will more cases of companies buying taxi companies or licenses.



By Park Ga-young (gypark@heraldcorp.com)

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