Tada’s Expansion Face Hurdle on Ministry’s Concern

Rental van-hailing service Tada logo

Transport ministry expressed its concerns that Tada‘s expansion plan could lead to more disagreement with taxi drivers. The rental van-hailing service faces hurdles due to the ministry’s announcement.

Car-sharing app SoCar‘s subsidiary Value Creators & Company (VCNC), which operates Tada’s service, announced on Monday that it would expand the number of its vans from the current 1,400 units to 10,000 units. It will also increase that of contract drivers from 9,000 to 50,000 by the end of 2020

Tada, which mainly operates in Seoul and the surrounding metropolitan area, will expand its service to the whole country.

“There has been growing demand from Busan, Daegu, and other areas,” VCNC CEO Park Jae-uk announced during a press conference to celebrate the first anniversary of Tada’s launch.

The Ministry of Land, Infrastructure, and Transport said the transport platform operator’s plan was “inappropriate.” The statement was released after VCNC’s announcement. The ministry added that the plan could ignite controversy over the services and provoke more conflicts with taxi drivers. The concern came at a time when the government has been taking on actions to settle these and promote mutual growth between the new platform companies and conventional taxi.

Tada uses outsourced drivers and 11-seat Kia Carnival vehicles to provide its service to over 1.25 million users. The rental platform expanded its reach rapidly over the past year despite objections for taxi drivers.

VCNC stressed that it offers legal services amidst taxi unions calling the service “illegal.” The operator cited an enforcement ordinance under the Passenger Transport Service Act, permitting companies to provide drivers to rental vehicles with 11 seats or more.

The transport ministry announced in July a set of proposals saying it would pass legislative measures by the end of the year. The rules are to settle the intensifying conflict between the new mobility platform operators and conventional taxi service providers

The proposed measures included the government’s control of the number of taxi licenses that can be purchased and released to the mobility platform providers.

VCNC CEO Park expressed his disappointment with the measures. During the press conference on Monday, he said the core of the platform is the flexibility to supply the following demand.

“The government has moved to create laws calling them innovative measures, but there is a great possibility for such measures to become regulations that block new businesses,” he said. “More sufficient discussion will be necessary.”

The ministry stressed again that the additional services of the platform providers should be created within the limits of the new legislative measures. It said that it would seek to revise the enforcement ordinance of the Passenger Transport Service Act, which opened the way for the Tada service.

The ministry added that if the enforcement ordinance is revised, the Tada service will become illegal.

Regarding the ministry’s statement, a VCNC official said, “We will continue to consult with the ministry.”

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