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THE INVESTOR
November 29, 2020
Big Reunion

Startups & Investors

Kakao Mobility’s woes over carpooling service expected to linger

  • PUBLISHED :January 16, 2019 - 15:50
  • UPDATED :January 16, 2019 - 16:45
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[THE INVESTOR] Kakao Mobility’s carpooling service, which was in a trial stage for around a month, screeched to a halt earlier this week after the recent suicide of two disgruntled taxi drivers who feared it could wreak havoc on their means of livelihood.

Although the company stopped running the service on Jan. 16 and said it wants to sort out issues with the taxi operators, the widening chasm with the cab companies and drivers is unlikely to narrow anytime soon.

“As four different groups representing the taxi industry have been jointly involved in talks with the ruling Democratic Party of Korea and Kakao Mobility, opinions have differed among the groups themselves,” an industry source with knowledge of the matter told The Investor, implying that it would take some time for them to come to the table, let alone reach an agreement.

The source also said that the Korea National Joint Conference of Taxi Association is the most vocal group of the four and exerts the largest influence over making final decisions. It had decided at the last minute not to partake in the first official negotiations planned late last year.


Taxi drivers stage a protest gainst Kakao Mobility's carpooling service in August, 2018. (Kim Seong-woo/Herald Biz)



Related:

Kakao puts carpool beta service on hold indefinitely
Kakao begins pilot carpool service, sets official launch for Dec. 17

Despite the mobility firm’s latest announcement to stop the service, the hardline taxi association said it would not start negotiations, mentioning internal documents of the Transport Ministry, which reportedly include guidelines to side with the mobile services firm to nurture the emerging car-sharing segment.

Calling for Transport Minister Kim Hyun-mi to step down, the alliance said it is also considering filing a complaint against the firm for illegally fetching private cars for commercial purposes. The ministry has denied the existence of such internal documents.

“The joint alliance of the taxi associations is yet to accept Kakao Mobility’s suggestion to come to the table because of the ministry’s internal documents,” said Lim Seung-woon, an official from the Korea Taxi Union, representing cab drivers across the nation.

He indicated, however, that there is still a chance that the interest groups representing the taxi industry would show up for talks with the mobility firm.

“All the associations will put our heads together and decide on how to respond as soon as possible to the latest developments,” Lim said.

Jeon Hyun-hui, a lawmaker who heads a task force to solve the conflict between taxi operators and Kakao Mobility, has requested the cab associations to make a decision on official negotiations with the subsidiary of mobile messenger firm Kakao and the leading political party Democratic Party of Korea.

Although there has been no public survey over the carpooling service, many people, especially those in their 20s and 30s who are not satisfied with traditional taxi services, have hailed the launch of ride-sharing services here.

The conventional taxi industry has been widely criticized for cherry-picking customers for a long-distance ride and offering a poor, or even dangerous, driving experience. In December last year, taxi drivers staged one of the largest protests in the nation, opposing the carpooling service. At the time, public sentiment, however, was not on the drivers’ side.

It is forecast that the ride-sharing services will exponentially grow in the future.

Research firm McKinsey & Co. expects that one out of 10 new cars will likely be a shared vehicle by 2030 and increase to one out of three by 2050.

Financial services firm Meritz Securities previously forecast that the carpooling service would make 7.1 billion won (US$6.30 million) revenue this year with the firm’s entire sales coming in at 74.2 billion won.

“The halted carpooling service will inevitably affect Kakao Mobility’s bottom line this year,” an industry source said.

By Kim Young-won (wone0102@heraldcorp.com)

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