SEOUL, Nov. 23 (Korea Bizwire) – Kakao Corp., the operator of South Korea’s most widely used messenger app KakaoTalk, launched a premium taxi service earlier this month, but it had to start with only foreign brands as talks with the country’s largest homegrown automaker fell apart due to differences over contract terms.
On Nov. 3, Kakao launched KakaoTaxi Black, a high-end cab-hailing tool for smartphone users, armed with a fleet of around 100 foreign vehicles – mostly from Mercedes-Benz E-Class. Kakao plans to expand the service beyond the capital city of Seoul later on.
Despite the launch with fanfare, local premium models, such as the Equus, the flagship model of No. 1 homegrown automaker Hyundai Motor Co., and the K9 of Kia Motors Corp., have been excluded altogether from the list of available cars.
“We held talks with Hyundai Motor for a possible inclusion of the Equus in the fleet, but the talks fell apart as it withdrew in the middle of negotiations without specific reasons,” a Kakao official told the English division of Yonhap News Agency on condition of anonymity. “It appears that Hyundai thinks that the Equus’ luxury image is not fit for a taxi service.”
Hyundai Motor countered that its withdrawal has nothing to do with an image issue. It cited, instead, Kakao’s excessive and unacceptable demands as a major reason for dropping out of the talks.
“They wanted to buy an LPG model, which is not available for the Equus. But they still insisted on converting the Equus into LPG vehicles on their own while demanding us provide a product warranty. That is absolutely unacceptable,” a Hyundai Motor official said.
Kakao provides an online platform through which customers can call up a taxi anytime and anywhere for the new premium taxi service, with an association of more than a dozen taxi companies running vehicles and a South Korean company providing related training and other services for the drivers.
The online taxi-hailing service is in its embryonic stage, but the relatively successful operation of the current Kakao Taxi app, which was launched in late March, bodes well for a wider use down the road in Korea, one of the world’s most wired countries.
KakaoTaxi is a cab-hiring app that only requires users to type in destinations, which will be sent to an available cab driver. The app doesn’t require the rider to tell the driver their current location, since the app will automatically show it on the driver’s app through the Global Positioning System.’
Kakao admitted that there was such a demand from taxi drivers for the LPG conversion, but it does not appear to be the main reason for the breakup in talks. An official said it appears that Hyundai Motor just doesn’t want to join the service.
Kakao emphasized that it is “still in talks” with Hyundai Motor to introduce its premium vehicle models for the new taxi-hailing service but noted that the Equus is still not subject to negotiations due to Hyundai’s “unchanged stance.”
Hyundai Motor seems to be sticking to its earlier stance, saying that it is open to negotiations with Kakao but “not until Kakao changes its own stance” on what it had claimed about the LPG conversion issue.
With the two local tech and auto giants pointing their fingers at each other for the failed talks, Uber has started its own premium taxi-calling service consisting of Korean vehicles only, signaling a fierce competition down the road in the fledgling taxi service market.
The U.S.-based company recently said that it has signed a partnership deal with Kia Motors Corp., the country’s second-largest carmaker and a smaller affiliate of Hyundai Motor.
Under the deal, Uber-affiliated taxi drivers can purchase K9 vehicles at a special rate.
UberBlack provides a platform through which self-owned taxi drivers — unlike those affiliated with taxi companies under KakaoTaxi Black — receive calls from customers. Technically, foreign brand vehicles can be used through the app but practically, it is a local brand-oriented service.
“Currently, we are open to both foreign and domestic brands that meet the engine capacity requirement,” a PR official for Uber said.
“Taxi drivers can purchase foreign brands to join us but given that most of them are driving local brands and our partnership deal with Kia is also about providing a discount for the K9, you can say that our service is technically oriented around local brands.”