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Business Trends

Tokyo to trial cab-sharing apps but to Japanese speakers only

Japan's first such experiment kicks off Monday for seven weeks

The trial of the cab-sharing apps is part of Japan's efforts to revamp its taxi industry. (Photo by Tomomi Kikuchi)

TOKYO -- A seven-week trial of cab-sharing apps in Tokyo will kick off next Monday, the first of its kind in Japan.

On Thursday, two taxi groups in Tokyo, Nihon Kotsu and Daiwa Motor Transportation, revealed details of their new apps that let customers find other riders to share a cab with. Customers will be able to book a cab through their mobile apps and if they want to share a ride, the app will match them up with other passengers heading in the same direction. The service will be available on 949 taxis in Tokyo.

The trial is among many initiatives aimed at revamping the Japanese taxi industry, which has traditionally been heavily regulated in terms of fares it can charge and the number of cars on the road. Unlike China and the U.S., the likes of Uber and Lyft are essentially banned in Japan. But the emergence of disruptive forces like Uber has brought the industry to a turning point, especially as it is struggling to get customers because of its relatively high fares.

"To be honest, we do feel worried that the popular opinion in Japan will push for the introduction of private car-hailing apps [like Uber]," said Ichiro Kawanabe, chairman of Nihon Kotsu and Japan Federation of Hire-Taxi Associations. Kawanabe said that private cab-hailing is not suitable for the Japanese market where taxis are known for their safety and quality. 

"Our cab-sharing service can offer customers cheaper rides while increasing the productivity of drivers and ensuring the quality remains top-notch," he added.

While the trial is one step toward reforming the industry, there seems to be a few catches that could hinder the cab-sharing service from becoming widely accepted.

First, the apps are only offered in Japanese for now, which makes it difficult for foreigners and travelers -- many of whom are more familiar with cab-sharing services than the locals -- to take part in the trial. The companies said they wanted to capture the local market first before offering the service to foreigners.

Kawanabe emphasized that the service is eyeing foreign tourists as potential customers. "In large events like the Olympics in 2020 and other sports events, we expect the demand for taxis to surge and cab-sharing services can come to good use," he said.

Second, two different types of cab-sharing services will be rolled out, which could confuse customers. The two participating taxi groups will launch two separate apps that function quite differently.

The app offered by Nihon Kotsu works in a similar way as UberPOOL, the sharing function offered overseas by Uber. Customers will specify a pick-up and a drop-off point on the map, and the app will automatically find another rider going in a similar direction. The fare -- around 20-40% cheaper than a normal taxi ride -- will be displayed at the time of booking.

Daiwa Motor's service, which will be added to its existing taxi-booking app, works more like a classified ad for people looking for co-riders. Customers can either post their ride schedules along with the pick-up and drop-off points, or choose from a list of rides already posted by other riders. The pick-up points are also limited to the 30 pre-designated locations indicated with taxi logos on the map.

Each app has its own rules, too. For example, Daiwa's service will only allow customers of the same sex to share a ride. While customers could avoid this by not designating their gender on their profile, the function could potentially halve the possible pool of co-riders, making it more difficult to find matches.

Nihon Kotsu's app only allows single-riders, while UberPOOL allows a maximum of two riders per booking. It will also charge the riders 100% of the estimated fares if they cancel after the booking is confirmed. While Uber and its Southeast Asian competitor Grab also charge cancellation fees, they usually limit the charge to a few dollars.

Whether the cab-sharing services can be widely adopted still remains to be seen, but the industry seems confident that they have found a way. "If we can combine the latest IT with the quality of our drivers, we can really capture new customers," said Kawanabe.

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