Tada operator slashing workforce amid revenue struggles

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Tada operator slashing workforce amid revenue struggles

Published: 16 Jun. 2023, 19:24 Updated: 18 Jun. 2023, 15:48

A Tada vehicle on the street of Jung District, central Seoul, on June 1 [NEWS1]

The operator of the van-hailing service Tada is trying to cut its headcount with the company’s management on shaky grounds after the suspension of its main service.

VCNC, the operator behind Tada, began accepting voluntary resignations from its employees on Wednesday, a VCNC spokesperson confirmed on Friday.

The voluntary resignation period will last a week.

“It’s part of our strategy for efficient company management,” said a VCNC spokesperson.

Although the scale of the restructuring was not revealed, media reports say that the operator is aiming to reduce its current workforce of 90 people by half.

Employees who voluntarily resign no longer have to show up for work, though they will officially leave the company on June 30.

They will be given a severance payment of two months' salary as well.

Sources say that the company is even considering asking employees to voluntarily resign if not enough employees quit.

The operator is going through intensive restructuring because it has yet to find a new revenue stream after its main moneymaker, the Tada Basic service, was terminated in 2020.

Tada Basic service offered 11-to-15-seat vehicles, along with a driver. VCNC used rental cars from Socar, a car rental startup, and matched drivers with app users.

Tada Basic service took off with some 1.7 million users within a year of its launch and was a popular transportation option. However, it met with strong opposition from taxi driver unions, leading lawmakers to pass a revision to the Passenger Transportation Service Act that essentially outlawed Tada Basic service in 2020.

Tada Basic service was suspended the same year as a result.

The revised Passenger Transportation Service Act — popularly nicknamed the "Tada Prohibition Act" — prohibited the renting of 11-passenger vehicles with drivers for anything other than tourism purposes, mandated that vans be rented for at least six hours at a time and required users to possess boarding passes when renting or returning the vehicles at airports and seaports.

Socar was founded by its former CEO Lee Jae-woong in 2011. With Socar's affiliate VCNC, Lee launched Tada in 2018.

After the Tada Prohibition Act was passed, online bank Toss took over VCNC in 2021. It aimed to create synergy by connecting the mobility and fintech businesses and actively pushed promotions like rebates for using Tada service through Toss.

However, the bank's Tada effort suffered setbacks due to difficulty in acquiring automotive chips due to the global chip shortage.

Meanwhile, local reports say that Tada will be merged into personal mobility startup Swing, which runs over 100,000 personal mobility devices.

A VCNC spokesperson said Friday that Tada "is in talks with a couple of companies" and that a related announcement will be made soon without specifying further.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]