SoCar’s board directors held a meeting on Friday deciding to withdraw the plan to spin-off Tada as a standalone company.
Head of Tada operator Value Creators & Company (VCNC), Park Jae-uk, would replace SoCar’s founder and chief executive officer, Lee Jae-woong as SoCar’s CEO.
Value Creators & Company (VCNC), operator of leading South Korean ride-hailing service TADA, said on Thursday that it would end TADA Basic service after the National Assembly passed the “TADA Prohibition Act” on Friday last week. The revised Passenger Transport Act prohibits the operation of such services that do not possess a taxi license.
VCNC’s decided to “indefinitely terminate” TADA’s main service on April 10. TADA Basic allows passengers to rent a van through the company’s service app.
The company’s CEO, Park Jae-uk, expressed his disappointment, saying that it would be difficult for them to continue the service’s operation for even a month. He added that investors have also stopped their investments because of the growing distrust of the South Korean government and parliament.
CEO Park Jae-uk gave notice to drivers that VCNC would halt the operation of TADA Basic. However, Park assured that other services, including TADA Premium, the reservation-based TADA Private, and airport ride service TADA Air would continue to function and that they would do their best to help them.
TADA Premium works with luxury vehicles and operates with drivers possessing taxi licenses.
VCNC stated it plans to downsize its workforce because of the ride-hailing service suspension. The company also requested 30 percent of its 20 employees to resign.
Despite VCNC’s profit losses over the issue, the company said it vows to still compensate each driver by paying the rest of their salary over the next month.
Revised Passenger Transport Act
Under the revised law, transport platform operators can provide 11 to 15-seat rental vans with outsourced drivers only if passengers use the vehicle for touring purposes for more than six hours at a time. The revised act also only allows outsourced drivers if the users rent the vans at airports or ports.
The revised bill came a month after the Seoul Central District Court ruled in favor of the ride-hailing service to operate freely.
VCNC claims that the design of the revision was to prohibit the company from operating TADA’s Basic service.
After the revision to the Passenger Transport Act passed, startup officials voiced their concerns that it would halt innovation and have an upsetting impact on the startup community.