Popularity of Large Taxis Amid Taxi Crisis... Fierce Competition to Recruit Drivers

Despite Elastic Fares Up to 4 Times Higher, Users Surge
Mobility Industry Expands Fleet and Drivers to Grow

[Asia Economy Reporter Yuri Choi] As the taxi shortage continues, the popularity of large taxis is increasing. This is because more users are willing to take them despite the high fares. With growing service awareness, the mobility industry is competing to expand their fleets and secure drivers.

Large Taxi Users Surge...Riding Despite High Fares

According to the mobility industry on the 9th, the use of large taxis has recently surged. As the number of regular mid-sized taxis has decreased due to a shortage of drivers, making it difficult to catch a taxi, users have flocked to large taxis despite their higher fares. Large taxis are taxi services using 9- to 11-passenger large vans such as the Carnival and Starex. They have introduced a dynamic pricing system, making fares up to four times more expensive than mid-sized taxis.

The average daily number of users of ‘Kakao T Venti,’ operated by Kakao Mobility, increased by 84.7% in July compared to the same period last year. During the same period, the number of reservation calls jumped by 495.5%. Other large taxi services show similar trends. ‘Tada Next’ saw the number of completed drop-offs increase by more than 46% in August compared to the end of last year, right after its beta test. The number of users of ‘I’m Taxi’ rose nearly 20%, from 260,000 in May to 310,000 in July.

The mobility industry is optimistic about the expansion of the large taxi market. They believe that as user experience grows, the market between mid-sized taxis and premium taxis will expand. Although investment costs are higher initially, it is expected that profitability will improve due to the high per-call fares under the dynamic pricing system.

Fierce Fleet Expansion Competition...Drivers Poached

Kakao T Venti, which recently surpassed 1,000 vehicles in operation, is aiming for over 2,000 vehicles when including drivers waiting after vehicle contracts. Tada Next and I’m Taxi, currently operating about 500 to 800 vehicles each, plan to increase their fleets to 1,500 vehicles by the end of the year.

Competition to secure drivers is also intense. Large taxi drivers must hold taxi licenses with at least five years of accident-free experience, making it difficult to recruit drivers. This is why the industry is offering various incentives to attract drivers. Cases of drivers being poached back and forth have emerged. The competition intensified especially after Tada Next officially launched in April. Tada lowers platform fees to 5%, half the usual rate, if certain conditions are met. They also provide interest-free loans of 36 million KRW for vehicle purchases and up to 10 million KRW for promotional expenses.

Kakao Mobility has also temporarily reduced its platform fees until the end of this year. Previously, the platform took 10% of drivers’ revenue as fees, but now 5% of that is returned as subsidies. A mobility industry insider said, "Many drivers are switching platforms even paying contract termination penalties depending on the conditions set by the platform companies," adding, "Since market expansion is the priority, a cutthroat competition to attract drivers is underway."

The number of drivers switching from mid-sized taxis to large taxis is also increasing. Due to dynamic pricing, profitability is better compared to mid-sized taxis. Even under the same working conditions, income differs by about 1.5 times. When focusing on driving during expensive late-night hours, the difference can exceed twice as much.

Although Seoul City is pushing for a fare increase for mid-sized taxis, the atmosphere remains largely unaffected. Even if the increase is implemented, it is expected that drivers will continue to switch to large taxis due to higher expected earnings. There is also a forecast that if the fare gap between large taxis and mid-sized taxis narrows due to the fare increase, the number of users will further increase.

A representative from the Seoul Private Taxi Association said, "The current fare increase proposal is not enough to increase the supply of mid-sized taxis," adding, "Since large taxis are more profitable and have passengers willing to pay higher fares, word is spreading that driving is easier, and the number of drivers leaving continues to rise."

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