The taxi and ride-sharing services are expected to be impacted by the aftershocks of the martial law. Initially, the mobility industry had diversified its services as the number of foreign visitors increased following the COVID-19 endemic. However, as various countries express concerns about their citizens visiting South Korea, the expansion of new businesses in the mobility sector is expected to face obstacles. The United States, the United Kingdom, Japan, and Canada have recently issued travel warnings regarding South Korea, and according to Bloomberg Intelligence, the number of Chinese tourists visiting South Korea in the first quarter of next year is estimated to decrease by about 19% compared to this year.
◇ The foreign demand report initiated new business but… disruptions due to martial law
According to SOCAR on the 16th, the reservation rate for the foreign-targeted vehicle sharing service being implemented in Jeju Island has dropped by about 50% around the date of the martial law declaration on the 3rd. SOCAR had promoted the foreign-targeted vehicle sharing service as a new business this year. The service was launched in Jeju Island in August, and based on its operational performance, the company planned to expand the business to Seoul and Incheon next year.
A SOCAR representative analyzed the vehicle reservation rates for foreigners for the 9 days before and after the martial law declaration on the 3rd, noting that they had decreased by about half, and added, "The seasonal factor of winter may also have had an impact."
Taxi-hailing platform companies aiming to secure foreign tourists as new customers are also in a difficult situation. Kakao Mobility launched the foreigner-exclusive global mobility platform "K-Ride" in June, allowing users from 14 countries to install the K-Ride app and utilize Kakao T Blue, Venti, Black, and Deluxe taxi services. However, as the demand for tourism in South Korea is expected to decline next year, K-Ride is also expected to be affected.
◇ Uber sees an increase in foreign users post-rebranding… needs to reconsider new business
Fortunately, Kakao Mobility, which has a large number of domestic users, is in a somewhat better position. The global brand Uber (formerly OTY) has a relatively high number of foreign users compared to Kakao Taxi. Tourists find Uber appealing as they can hail a taxi through the existing app without installing a separate one when visiting South Korea. Dara Khosrowshahi, CEO of Uber, visited South Korea for the first time in August and noted, "Uber is a global company, so all foreign tourists coming to South Korea and South Koreans going abroad can use Uber."
However, as the likelihood of a decline in tourism demand in South Korea increases, Uber's position in the country is expected to become narrower. Since entering South Korea in collaboration with SK Square's Tmap Mobility, Uber has been continuously operating at a loss, and its market share remains in the single digits.
An Uber representative stated, "Since Uber Taxi was rebranded in March this year, the number of foreign users traveling to South Korea has significantly increased," and added, "We have a strategy to expand services to domestic users next year, but since foreign users account for a substantial portion, we expect to be affected."
A representative from the investment industry noted, "Since the foreign-targeted business in the mobility sector is still in its early stages, it will not have a significant impact on revenue," but added, "Given the unexpected variables, it seems necessary to re-evaluate the new business plans."