Kakao Mobility is slated to begin official operation as an independent subsidiary of Kakao from next month, with aims to apply new profit-making business models to the firm’s key transportation services.

Kakao, operator of South Korea’s most widely-used mobile messenger KakaoTalk, said Monday that Kakao Mobility, which it spun off in May, would officially take off from Aug. 1.

The new subsidiary will oversee the operations of Kakao’s mobility services including the taxi-hailing app Kakao Taxi, chauffeur app Kakao Driver and mobile navigation app Kakao Navi. It also plans to introduce a new parking space search app called Kakao Parking by the third quarter. 


According Kakao, Kakao Mobility plans to focus on establishing a concrete revenue model for its mobility services, most of which have managed to successfully amass a large user base but have not found ways to generate stable profits -- an issue that has concerned investors.

The Kakao unit has secured 500 billion won ($433 million) from a consortium led by US-based private equity fund TPG to implement the new models and move forward its business agendas.

The company is reportedly considering several options for its key services. Kakao Taxi -- the country’s dominant taxi-hailing app boasting some 3.5 million monthly users -- is most likely to launch a new paid taxi-hailing service for corporate clients.

For instance, companies sign a contract with Kakao Taxi, under which a client company’s employees can use the taxi-hailing service to make work-related trips. Kakao would earn profits by collecting a fee from the client firms for each trip made.

Kakao Mobility could also apply its simplified mobile payment service Kakao Pay to its taxi-hailing app so that customers can automatically pay for their taxi rides using their pay app accounts. Profits would come from the fees paid by credit card companies on the Kakao Pay platform.

Kakao Mobility is also looking to partner with Korea’s parking space operating companies to build a system that will guide users to various parking spots available in different neighborhoods in Seoul and other major cities.

Kakao would mostly likely earn profits by collecting fees from the partnering parking space operators that join the Kakao Parking platform, though it has yet to finalize the nature of the business model it would adopt.

In the longer term, Kakao Mobility is also eyeing the smart mobility business on a global scale. It recently began talks to collaborate with global automaker Volkswagen to jointly work on core technologies for connected cars and autonomous vehicles.

Kakao’s GPS-based navigation, parking and artificial intelligence-powered voice assistant technologies could be applied to connected vehicles developed by Volkswagen, a Kakao representative said.

By Sohn Ji-young (jys@heraldcorp.com)