Kakao Mobility to launch car transport service in June

South Korea’s Kakao Mobility Corp. will begin providing drivers for door-to-door auto transport from as early as mid-June, according to tech industry sources on Wednesday. The company is recruiting drivers for the service, who will move cars for delivery of rental cars, cars for sale or repairs.  

Under Korean mobile platform giant Kakao Corp., Kakao Mobility is providing taxi-hailing, car parking, autonomous driving and chauffeur services. In 2016, the company began its designated driving service, which is sending drivers to transport cars when their owners are too drunk to drive. It is set to expand its presence in the on-call car transport service now.

Some local designated driving service providers, such as Logisoft and Iconsoft, are currently offering door-to-door car transport services. By using its mobile app Kakao T, Kakao Mobility will provide drivers to such firms. Kakao Mobility said it won’t charge drivers fees to aid in their profitability and allow them to receive more orders.

The auto transport drivers can apply for car delivery insurance programs, which are managed by local insurers partnering with Kakao Mobility. The programs charge the drivers an insurance fee per transport. Compared with monthly fee payments, this will reduce fees for drivers who complete fewer than three transports of cars a day on average.   

Since it entered the chauffeur service market in 2016, Kakao Mobility soon swept the mobile platform-based designated driving service market. In 2019, it acquired Callmaner via its hotline operating subsidiary CMNP. Callmaner is the second-largest player in the local designated driving service provider market.  

Last year, Kakao Mobility and Korea Drive, the operator of 1577, the largest player in the hotline-based designated driving service market in Korea, set up joint venter K Drive to expand the Kakao unit’s presence in the market. The hotline-based and mobile platform-based services respectively take 80% and 20% of the local designated driving service market.  

However, Korean mobility giants such as Kakao Mobility and T Map Mobility are facing challenges in expanding their designated driving service businesses. The Korean government classified this kind of service as a small and mid-sized enterprise (SME)-suitable business area in May as Korean chauffeur service SMEs required for this classification last year to prevent conglomerates’ local market dominance.

Accordingly, conglomerates have restrictions on their entry and business expansion in the local designated driving industry from June 1 for three years. Due to the regulations, mobility conglomerates are eyeing car transport services to accelerate their chauffeur businesses.

Kakao Mobility is planning to act as a broker to connect its drivers to the designated driving services providers for some time. It has no plan to connect customers directly to drivers at the moment, the firm said.

There is no ground to restrict mobility firms’ entry into the auto transport business as this and designated driving services are considered different business areas, said Korea Commission for Corporate Partnership, the committee that classifies SME-suitable business areas for fair competition. T Map Mobility, a spin-off from Korean major telecommunications company SK Telecom Co., announced last year it will launch a car transport service and has not launched it yet.

Write to Sung-Soo Bae and Han-Gyeol Seon at baebae@hankyung.com
Jihyun Kim edited this article.