Uber aims to break into Japan with taxi test-pilot programme

It takes just a few seconds to hail a cab in Japan. Uber is hoping to break into the lucrative market.Taro Karbie/AFP

Uber announced Tuesday it would start its first taxi-hailing pilot programme in Japan this summer, as it bids to break into a tough market in the world's third-largest economy.

The US firm has found it difficult to penetrate the Japanese market, where risk averse passengers prefer to stick to their high quality traditional taxi service.

Hailing a taxi rarely takes more than a few seconds in major Japanese cities and there has been a relatively sluggish uptake of services like Uber, where consumers order an unlicensed car via a smartphone app.

But Uber said on Tuesday it would launch a pilot programme this summer to hook up tourists and residents in the western Awaji island with available taxi drivers, according to AFP.

The firm said it aimed to provide local residents and tourists with "reliable and safe transportation" on the small island, which is home to just over 150,000 people.

"I'm very excited that Uber's technology will contribute to further enhancing the transit environment of Awaji Island," Brooks Entwistle, Uber's chief business officer, said, adding it will be "the first initiative of its kind in Japan".

“As we join forces with local taxi companies and the Awaji district administration office, we will work together to enrich the product offerings of what will be the first initiative of its kind in Japan to meet the local needs,” he told Bloomberg.

Uber is far from alone in targeting the Japanese taxi market, with Chinese ride-hailing giant Didi Chuxing and Japanese telecom firm SoftBank announcing a deal in early February to develop a taxi app in Japan, according to AFP.

SoftBank has heavily invested in the taxi market and recently took a 15 per cent stake in Uber.

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And Sony has said it is planning a joint venture to offer artificial intelligence technology to six taxi operators, which currently own a total of 10,000 vehicles in Tokyo.

The technology would use AI to predict demand for taxis and allow companies to more efficiently mobilise their resources.

Car maker Toyota has also announced an investment of ¥7.5 billion (Dh257 million) in the JapanTaxi app, which says it is the biggest taxi-hailing app in Japan.

Uber didn’t disclose financial details or partners, Bloomberg reported. Awaji Island’s taxi companies collectively oversee a fleet of a few hundred cabs, according to the San Francisco-based company. The pilot programme is the first initiative following chief executive Dara Khosrowshahi’s visit to Japan in February, when he outlined a new strategy of forging partnerships with taxi companies.

Nihon Kotsu and Sony have also released or are working on rival taxi-hailing apps, although it’s more challenging to make money solely as a dispatch service rather than taking commissions on fares, Bloomberg said.

Awaji Island is located in the Seto Inland Sea, between the bigger islands of Honshu and Shikoku. It’s home to one of the world’s longest suspension bridges and is a popular biking destination. About 12.8 million people visited the island in the 12 months through March 2017, according to government data.

The pilot, which will last through March, is a minor victory for Uber, which has adhered to local rules since debuting in Japan five years ago. Uber mainly operates as a car-hailing service in Tokyo and hasn’t sought to disrupt the country’s ¥1.72tn taxi industry.

Prime Minister Shinzo Abe’s administration is seeking to use Uber’s technology to promote tourism on Awaji. It’s a chance for the startup to raise awareness of its services by operating as a taxi dispatcher and possibly expand into bigger markets in the archipelago.