By Park Jin-hai
BMW and Mercedes taxies will begin operating in Korea as early as July as the government plans to loosen regulations to allow other types of “luxury taxies.”
At a time when the demand for import vehicles has hit record highs, they are gearing up to take a big bite out of the local taxi market.
They will be called “gogeup taxi,” which means “high-quality taxi” in Korean. They are different from the current “mobeom taxi” or “deluxe taxies.”
The new luxury taxies will look like ordinary cars, and have no meter, and can freely charge fares based on the services they offer.
“There has been demand for luxury taxies. That’s why we are introducing new premium taxi services by relaxing related regulations,” said an official of the Ministry of Land, Infrastructure and Transport
Under the current Passenger Transport Service Act, vehicles with more than a 3-liter engine can only run as premium taxies.
Thus most imported cars including the BMW 7-series and Mercedes S-Classes and Audi A8 that have slightly less than a 3-liter engine couldn’t meet requirements.
Also, fare rates for premium taxies will have to comply with what respective city governments permit.
The revised regulation, which lowers the minimum requirement to a 2.8-liter engine as well as placing fares at the operators’ discretion, will be placed under Legislative Office review this week.
“Like the luxury taxies we see overseas, these taxies will provide beverages and slippers for customers. We have been receiving phone calls from corporate taxi operators asking how to participate in the business,” said the official.
If it receives a green light at the Cabinet meeting, it will be implemented either in late July or August.
The BMW and Mercedes taxies are expected to encroach upon Hyundai Motor’s share in the market.
Hyundai Motor and Kia Motors have maintained market dominance with over 60 percent of the taxi business, supplying a total of 170,000 taxies out of all 250,000 taxies in Korea.
“There have been repeated calls from foreign carmakers to allow them to do business. Taxi operators also requested to use imported cars as part of their premium business,” said Lee Hang-koo, a researcher at the Korea Institute for Industrial Economics and Trade.
He said the development is somewhat inevitable, because demand for local taxies have been on the decrease due to increased private car ownership and wide accessibility to public transportation.
The land ministry moved to cut down the number of taxies by 50,000 by 2020, resolving the oversupply of taxies.
Unlike Uber taxies, only taxi driver license holders will be able to operate luxury taxies, thus the market can grow by absorbing the current mobeom taxi drivers.
“For Mercedes and BMW, whose cars are widely used in Germany, and running a luxury taxi fleet will not be a worry. But for Hyundai, it will pose a dilemma, because if its luxury vehicles like the Genesis are used for taxis, current Genesis owners could think again and move to import carmakers due to Hyundai’s damaged image. In Korea, customers don’t want to drive the same car those used for taxis,” he added.