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THE INVESTOR
December 09, 2019
Big Reunion

Startups & Investors

Tada retreats amid mounting criticism

  • PUBLISHED :October 16, 2019 - 15:26
  • UPDATED :October 16, 2019 - 15:36
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Commemorating its first anniversary on Oct. 7, VCNC, the operator of van-hailing service Tada, announced an aggressive plan to increase the number of vehicles to 10,000 by next year, by adding 8000 more. Little did the startup know that it would lead to a severe backlash.

The Ministry of Land, Infrastructure and Transport denounced Tada’s plan, saying its expansion plan would have a negative impact on the on-going negotiations on reforming the taxi industry and reignite the conflict between cab operators and mobility companies.

Taxi drivers gathered in front the headquarters of SK Group on Oct. 15 and the ruling Democratic Party the next day to urge investors and politicians to stop Tada’s operations. 

VCNC CEO Park Jae-uk talks about the company`s plan during a press conference on Oct. 7. (Tada)


Related: 
1-year-old Tada unveils aggressive expansion plans
Mobility platforms rush to join forces with taxi companies
Mobility firms disappointed with new regulations on ride-hailing services


Following another round of opposition from the government and taxi industry, VCNC released a statement that it would halt its plan to increase the number of cars for its Basic service until the end of this year, adding that it would focus on Tada Premium, its high-end taxi-hailing service.

“We’ve tried our best to improve users’ mobility experience and drivers’ welfare and working conditions in the past year but decided it is the time to take a bigger social responsibility,” CEO Park Jae-uk said in a statement.

“We will actively discuss ways for innovative mobility services to be included in the government’s measures to reform the taxi industry,” Park noted, adding that the company will consult with taxi operators for various partnership methods.

The statement came a day after taxi drivers gathered to pressure SK Group, the second-largest shareholder of SoCar, to protest against the group’s investment in the company, which owns 100 percent stake in VCNC. 

A taxi driver holds a banner that criticizes SK Group for its investment in Socar, the parent company of VCNC. (Yonhap)


“SK has not only invested a huge amount of money in Tada, which is carrying out illegal taxi services, it is also seeking to pour more money into the company,” a spokesperson for taxi drivers said.

“The company should withdraw its investment immediately and rather seek opportunities that respect the taxi industry.”

The taxi drivers also warned if SK Group continues to back Tada, they plan to carry all-out measures against the group including a boycott of all its services and products.

SK Group, the country’s third-largest conglomerate, has 95 subsidiaries, including telecom giant SK Telecom, T-Map Taxi, SK Energy and SK Networks.

The group secured 20 percent stake in SoCar with 59 billion won in 2015 and expanded its holdings to 23.87 percent. The mobility company, acquired VCNC in July 2018, which was famous for a communication app for couples, and turned into a ride-hailing company as the confrontation between taxi operators and mobility apps began to intensify with the launch of Kakao’s ride-hailing service.

Tada launched a van-hailing service using a legal loophole since passenger cars cannot be used for commercial purposes under Korea’s transportation law, which makes an exception for minivans.

Facing several incidents of self-immolation by taxi drivers, Kakao eventually halted its plan to launch an Uber-like service and instead focuses on taxi-hailing services.

To resolve conflicts between cab operators and new mobility platforms, the ministry on July 17 unveiled a series of measures, seen as a victory for the taxi companies.

The taxi operators also announced that they would hold another demonstration on Oct. 23 in front of the National Assembly.

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

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