The taxi and ride-sharing services are expected to be impacted by the aftereffects of the state of emergency. Initially, the mobility sector started diversifying its services as the number of foreign visitors increased following the COVID-19 pandemic. However, with various countries expressing concerns about their nationals visiting South Korea, the expansion of new businesses in the mobility sector is likely to be hindered. The U.S., U.K., Japan, and Canada have recently issued travel warnings for South Korea, and according to Bloomberg Intelligence, the number of Chinese tourists visiting South Korea in the first quarter of next year is expected to decrease by about 19% compared to this year.
◇ Foreign demand report new business started, but… impact of the martial law
According to Socar on the 16th, the reservation rate for the ride-sharing service targeting foreigners being implemented on Jeju Island has decreased by about 50% around the time of the martial law declaration on the 3rd. Socar pushed forward with this ride-sharing service for foreigners as a new business this year. The service was launched on Jeju Island in August, and based on operational results, there were plans to expand the business to Seoul and Incheon next year.
A Socar representative explained, "Analyzing the vehicle reservation rates for foreigners nine days before and nine days after the martial law was declared on the 3rd, there was about a 50% reduction," adding, "Seasonal factors during winter likely played a role as well."
Taxi calling platform companies, which aimed to secure foreign tourists as new customers, are also in a difficult situation. Kakao Mobility launched a foreigner-only global mobility platform, "K.ride," in June. Users from 14 countries can use Kakao T Blue, Venti, Black, and premium taxi services if they install the K.ride app. However, with next year's tourism demand in South Korea expected to be weak, K.ride is also inevitably impacted.
◇ Uber sees an increase in foreign users after rebranding… need to review new business
The situation of Kakao Mobility, with a relatively high number of domestic users, is somewhat better. The global brand Uber (formerly Woowa) has a higher proportion of foreign users compared to Kakao Taxi. Tourists have a high demand for Uber as they can call taxis using the existing app without needing to install a separate app. Dara Khosrowshahi, CEO of Uber, first visited South Korea in August and said, "Uber is a global company, so both foreign tourists coming to Korea and Koreans traveling abroad can use Uber."
However, as the possibility of a decline in tourism demand in South Korea increases, Uber's position domestically is expected to narrow. Uber has been running a deficit since entering the market in collaboration with Tmap Mobility, a subsidiary of SK Square, and its domestic market share is in the single digits.
A representative from Uber stated, "The number of foreign users of Uber Taxi saw a significant increase since the rebranding in March this year," adding, "We have a strategy to expand our services to domestic users next year, but since foreign users account for a substantial portion, we expect to be affected."
An official in the investment sector noted, "Since the foreign-targeted businesses in the mobility sector are still in the early stages, they won't significantly impact revenues, but unexpected variables have arisen, so it seems necessary to review the new businesses as well."