In the End, 'Tada' Engine Stopped... The Decisive Moments That Led to Frustration

[Asia Economy Reporter Buaeri] The ride-hailing service based on rental cars, 'Tada,' has come to a halt after about 1 year and 5 months. With the passage of the amendment to the Passenger Transport Service Act (Passenger Act), known as the 'Tada Ban Law,' in the National Assembly plenary session, Tada officially declared, "We will temporarily suspend the Basic service within one month after the law is promulgated." We have summarized the decisive moments that led to Tada's setback.

Launched in October 2018, 'Tada' was a rental car-based transportation service that sent an 11-seater van when a passenger called a car via an application. It gained popularity with its comfortable and spacious vehicles and a system that did not refuse rides. Starting with 300 vehicles, Tada's fleet quickly expanded to 1,500 vehicles.

Conflict with the Taxi Industry... Taxi Driver Self-Immolation, Large-Scale Protests

On the 23rd, officials affiliated with the Seoul Private Taxi Association held a rally near the National Assembly in Yeouido, Seoul, urging the suspension of Tada operations. Photo by Jinhyung Kang aymsdream@

However, what seemed to be a smooth journey for Tada faced adversity starting in February last year when conflicts with the taxi industry began. The taxi industry claimed that Tada violated Article 4 of the Passenger Act by operating without the necessary licenses for transportation business and abused Article 18 of the Enforcement Decree of the Passenger Act, which was created to promote tourism and states that "persons renting passenger vehicles with 11 to 15 seats may arrange drivers for the rented vehicles."

Eventually, the Seoul Private Taxi Association filed a complaint with the prosecution in February last year against Lee Jae-woong, CEO of Tada's parent company Socar, and Park Jae-wook, CEO of the operating company VCNC. The conflict continued with incidents such as taxi driver self-immolation and large-scale protests demanding Tada's expulsion.

As the conflict persisted, the Ministry of Land, Infrastructure and Transport (MOLIT) stepped in to mediate. In July last year, MOLIT announced a 'Taxi System Reform Plan,' turning the conflict into a new confrontation between Tada and the government. The reform plan centered on platform operators paying contributions to the government and obtaining licenses to operate passenger transport services within the permitted total volume. Tada opposed this, citing significant uncertainty.

6 Trillion Won Investment Deal Falls Through

Lee Jae-woong, CEO of Socar (right), and Park Jae-wook, CEO of VCNC.

Later, in October last year, the ruling Democratic Party also proposed an amendment to the Passenger Act restricting Tada's business basis, causing another stir. The amendment, Article 34-2, proposed by Democratic Party lawmaker Park Hong-geun, allows operators to arrange drivers only when renting 11-15 seat vehicles for tourism purposes for more than 6 hours or when the rental and return locations are airports or ports. CEO Lee called this the 'Tada Ban Law' and waged a public opinion battle.

It is known that investment attraction also failed during this process. Socar attempted to secure a large-scale investment of about 600 billion won from global investors in October last year, but the deal fell through just before signing due to the prosecution's indictment and the proposal of the Tada Ban Law.

On the 29th of last month, the Seoul Central District Court acquitted CEO Lee and CEO Park, seemingly turning the situation around. Before the National Assembly Judiciary Committee's discussion of the Tada Ban Law, CEOs Lee and Park visited the National Assembly and made a last-minute appeal, saying, "If the Tada Ban Law is submitted to the Judiciary Committee, more than 10,000 drivers and users will lose their choice."

Passenger Act Passed in Plenary Session... Service Temporarily Suspended

However, there was no reversal. With the Ministry of Land, Infrastructure and Transport presenting a 'revision card' specifying rental cars in Article 49-2, the amendment to the Passenger Act passed the National Assembly Judiciary Committee after twists and turns and was approved in the plenary session on the 6th with 168 votes in favor, 8 against, and 9 abstentions out of 185 members present.

With the amendment's passage, 'Tada Basic' will become illegal after a grace period of 1 year and 6 months. However, the amendment reflects MOLIT's revision. MOLIT added a clause to Article 49-2, which defines types of platform transportation businesses, stating "including cases where vehicles for rental business are leased from car rental operators," thus opening the door for rental car-based businesses. Tada can continue its current business model if it pays contributions and obtains a platform transportation business license.

Immediately after the plenary session's passage, CEO Lee posted on his Facebook, saying, "Someone has to challenge innovation, but I don't know who will dare when being slandered as a fraudster and a criminal group," and criticized, "A lawmaker under prosecution for defamation verbally attacked entrepreneurs in the plenary session and even denounced colleagues." He also announced that the service would be temporarily suspended within one month after the law's promulgation.

This content was produced with the assistance of AI translation services.