Tokyo taxi firms to take on global peers with ride-sharing apps

by and

Staff Writers

Travelers to Tokyo may be surprised to find their perceptions of the high-tech metropolis to be far from reality when it comes to the use of ride-hailing smartphone apps such as Uber and Lyft.

But two taxi companies are looking to bring Tokyo up to speed with its global peers by introducing separate cab-sharing apps in a bid to offer lower prices and attract new customers despite the shrinking market.

Taxis in Japan are known for their clean interiors and quality service. They are also known for their expensive fares — partially a result of tough regulations that have protected the industry and kept out new competitors like Uber. The San Francisco-based company’s main car-hailing service is banned in Japan, where unlicensed, privately operated cars and drivers are forbidden.

But taxi companies have remained wary of the potential disruption services like Uber could bring to Japan’s market if the firm were to make a full entry, and they have been devising ways to make their own services more accessible.

A new seven-week trial launched Wednesday by Nihon Kotsu Co. and Daiwa Motor Transportation Co. could be a chance to offer consumers a taste of the convenience and cheaper fares sometimes available through ride-sharing services.

While the apps offered by the fleet operators function differently, both will allow customers with similar departure and destination points to share taxis and reduce fares by an estimated 30 percent.

Nihon Kotsu’s app has functionality similar to that of Uber, allowing customers to choose pickup and drop-off locations while the service looks for passengers riding on similar routes.

Daiwa’s service, which has been built within its existing taxi-hailing app, designates 30 predetermined pickup points. Users can create their own threads detailing their ride schedule — including pickup and drop-off points — or choose from a list of rides already posted by other users.

A ride from Tokyo’s Otemachi financial district to Shibuya, for example, usually costs ¥4,700. Sharing a ride, however, can reduce that price to ¥2,900, according to Nihon Kotsu.

Both services require payment by pre-registered credit cards, and the apps are only available in Japanese for now.

“We want to start with Japanese users and potentially expand the service to include the growing number of inbound tourists that are visiting Japan,” said Tatsuya Uehara, an official from the marketing division of Japan Taxi, a startup launched by Nihon Kotsu that created the app.

Japan attracted a record 28.69 million tourists in 2017, up 19.3 percent from the previous year for the sixth straight annual increase. The government wants to see that figure reach 40 million by 2020, when Japan will host the Tokyo Olympics and Paralympics.

The current trial, which is overseen by the land ministry and will continue until March 11, takes place in the capital’s 23 wards and the cities of Musashino and Mitaka in western Tokyo. In total, 300 Nihon Kotsu taxis and 649 Daiwa taxis are taking part in the experiment.

Pricey fares and changing consumer habits have seen the number of taxi users decline over the years. Figures from the Japan Federation of Hire-Taxi Associations shows that the number of taxi passengers in 2014 was 1.56 billion compared to 2.24 billion in 2004, a 30 percent decline. The number of taxis also fell to 228,325 from 265,480 over the same period.

“The experiment is part of an effort for us to attract younger customers by offering cheaper rates” said Uehara.