SEOUL, Oct. 7 (Korea Bizwire) — The operator of rental van-hailing service Tada said Monday it will sharply increase the number of service vehicles and drivers next year to meet rising demand.
But its expansion strategy drew an immediate backlash from the country’s transportation authorities, which have been seeking to intervene in months-long wrangling between the app-based hailing service provider and the taxi industry over its legality.
Car-sharing app SoCar’s subsidiary Value Creators & Company (VCNC) said it will raise the number of vans to 10,000 from the current 1,400 and that of contract drivers to 50,000 from 9,000 by the end of 2020, VCNC Chief Executive Park Jae-uk said in a press conference.
To strengthen the competitiveness of the Tada service, Park said, “We will seek a no-diesel policy, increase investment in companies with advanced technologies in micro mobility, autonomous vehicles and environment-friendly vehicle infrastructure for possible business ties.”
The transportation ministry called VCNC’s latest expansion plans “an inappropriate step” as the government, the taxi industry, VCNC and other ride-hailing platforms are still holding discussions seeking win-win solutions for all related parties.
“Tada’s plans to expand its service and fleet should be implemented under the measures currently in discussion,” the ministry said. It warned that regulations would be revised in order to prevent Tada from doing business.
“We are aiming to help the involved parties reach a consensus through discussions and revise the related laws as quickly as possible to prevent unnecessary conflicts,” a ministry official said.
VCNC plans to serve customers using gasoline-powered vans, but it aims to add all-electric vehicles to the lineup in the long term, a company spokesman said over the phone. All the vans are rented from parent SoCar.
The announcement is in line with VCNC’s broader expansion program.
On Sunday, VCNC said it will expand the Tada service — which was launched in October last year and now covers Seoul; Gwacheon, just south of Seoul; and some parts of Incheon, 40 kilometers west of the capital city — to all other metropolitan areas by the end of December.
The company is also considering launching Tada services in major cities such as Busan, Daegu and Daejeon and strengthening its services depending on market demand, Park said.
Tada offers ride-hailing services for 11-seat vans instead of sedans. Local transport laws allow rental cars with a capacity of 11-15 seats to be legally leased with a driver.
Tada’s app, which boasts over 1.2 million users, links customers to vans driven by one of the service’s pool of drivers.
The expanded service comes as VCNC is still at odds with the local taxi industry over the legality of the service. Taxi drivers claim that the Tada service is abusing a legal loophole and killing their jobs.
In July, the ministry came up with a plan to help settle the conflict between taxis and new platform companies and seek mutual growth.
In the ministry’s proposal, car-hailing services like the rental van-hailing service Tada should chip in a certain portion of their earnings to a state-managed fund to be established for the purchase of taxi driver licenses amid oversupply.
VCNC and the taxi industry refused to accept the government’s proposals. But the ministry said it will push forward with them despite the lack of agreement.
In Korea, taxi drivers have long been criticized for reckless driving, rudeness and selectively picking up passengers depending on their destination, so there has been rising demand for differentiated but inexpensive ride services.
Although Tada (the Korean word for “ride”) set its prices higher than those of conventional taxis when it started last year, its fares are currently not very different from those of normal taxis in Seoul, which rose 19 percent to a starting rate of 3,800 won (US$3.30) in February.