Kakao vs Tada... 'Daeri Unjeon' Flirting

[Asia Economy Reporter Buaeri] As it enters the second month since Tada's white Carnival disappeared from the streets, Tada operator VCNC is reportedly internally considering entering the designated driver market. Although it encountered the unexpected variable of COVID-19, the designated driver market is regarded as a hidden blue ocean in the continuously growing mobility industry.

◆Will 'Tada' launch designated drivers?= According to related industry sources on the 19th, VCNC has applied to the Korean Intellectual Property Office for trademark registration of 'Tada' related to the designated driver business. VCNC registered products such as 'designated driver brokerage business' and 'designated driver specialized franchise business.' It is also known that VCNC recently held discussions with domestic non-life insurance companies regarding insurance related to designated drivers. To start a designated driver business, subscribing to insurance products to cover accidents during designated driving tasks is essential. A representative from VCNC's parent company, Socar, said, "It is true that we are reviewing the designated driver business," adding, "The trademark application takes time, so we proceeded in advance."

If Tada enters the designated driver market, it is expected to compete with Kakao Mobility, which is almost the sole application-based intermediary platform operator. The existing designated driver market mainly operated through phone 'calls,' where designated drivers signed contracts with designated driver companies, and the affiliated companies used control programs under usage contracts. Control programs are designed to collect, store, and communicate designated driver information.

Since entering the designated driver brokerage business in 2016, Kakao Mobility launched a service connecting designated drivers and users directly through the KakaoT application. At the time of launch, 'KakaoT Designated Driver' had 50,000 designated driver members, which has now grown to about 150,000. According to the Korea Transportation Safety Authority, this year, the usage rate of control programs by designated drivers was 90.7% for 'KakaoT Designated Driver,' surpassing Logi's 68.4%, which was the industry leader.

◆Growing designated driver market= The mobility industry is interested in the designated driver market because it has fewer government regulations and allows for stable revenue generation. Unlike the taxi industry, which faces strict regulations such as license quotas and fare systems, the designated driver business has no legally fixed fares and no qualification requirements such as registration or reporting obligations for drivers. In the designated driver market, intermediaries can earn stable revenue by charging commissions. Currently, designated driver brokerage companies receive commissions of 20-30% from designated drivers. Kakao Mobility charges a 20% commission per trip.

The domestic designated driver market size is steadily growing. According to the Korea Transportation Safety Authority's 'Designated Driver Status Survey Policy Research' report, the designated driver market size is estimated to reach 2.7672 trillion KRW this year. This is 2.7 times the estimated 1 trillion KRW size in 2013. The number of designated drivers has also increased from about 87,000 to 165,000.

Experts note the high business effect relative to input costs. Professor Kang Kyung-woo of Hanyang University's Department of Transportation and Logistics Engineering said, "Since Tada and Kakao Mobility have already established platforms, entering the designated driver market requires almost no additional costs," adding, "The designated driver market is growing in size, and continuously accumulating databases such as 'user usage patterns' while operating the designated driver business will be beneficial for the mobility business in the long term."