Don't It Always Seem to Go: Japan's Century of Taxis

Life is like riding in a taxi. Whether you are going anywhere or not, the meter keeps ticking. - John C. Maxwell

On July 10, 1912, the Takushi Jidosha KK (タクシー自働車株式会社) was established, marking the beginning of Japan’s taxi industry. By August 5, the company began operations with six Model T Fords stationed at its headquarters in Tokyo's Yuraku-cho. These taxis, known as Tsujimachi Jidosha (辻待ち自動車, "cars waiting to be hired"), were based at Ueno and Shinbashi stations, two of Tokyo's main terminals at the time. The initial fare was set at 60 sen for the first mile and 10 sen for each subsequent mile.

The year 1912 was significant in Japan, both as the 45th year of the Meiji Era and the first year of the Taisho Era. After a protracted illness, Emperor Mutsuhito expired at age 61 on the night of July 29, though the official announcement came the next day. Through the remainder of the summer, major newspapers bore black borders until the Meiji Emperor's public funeral on September 17.

The year proved eventful in numerous other ways. In March, the forerunner of the Japan Tourist Bureau (JTB) was founded. In July, construction began on the Tsutenkaku Tower in Osaka, a replica of the Eiffel Tower that lasted until it was destroyed in a U.S. bombing raid in 1943. In September, the film studio Nihon Katsudo Shashin (today's famed Nikkatsu) was established.

Tokyoites were informed of the time each day at precisely 12 noon by a cannon salvo known as the Marunouchi no don (Marunouchi blast), which had been fired since 1871 from atop a hill in the grounds of the Imperial Palace overlooking the Marunouchi business district.

When Tokyo Station opened in 1914, Takushi Jidosha KK quickly expanded its operations to include this new transportation hub, ensuring that passengers could catch a cab at all of Tokyo's main train stations. The taxi industry grew alongside Japan's population, becoming an integral part of urban life.

During World War II, the taxi industry in Tokyo underwent significant changes. All taxi companies were consolidated into four main agencies, and their services were primarily allocated to the military, government, and war industries. This centralized system persisted in post-war Tokyo, but as Japan's economy rebounded, the number of taxis surged. The government stepped in to regulate the industry, setting a maximum number of taxis to prevent excessive competition.

The liberalization of the industry in 2002, however, led to harsh competition and declining wages for drivers. In response to consumer complaints about declining service quality, the government re-regulated the industry in 2013. Today, Japan's taxi industry is characterized by strict regulations, a declining number of customers, and poor labor conditions for drivers.

The Japanese taxi industry is something special, as anyone who has visited can attest. They are widely known for their spotless cars and polite drivers. The service of even the most quotidian taxi in Japan is equivalent to luxury limo services in most places. Doors open themselves, cars—though old-fashioned—are immaculate, and drivers are courteous, even wearing white gloves.

Worth nearly $20 billion, the taxi industry in Tokyo is among the world’s biggest. However, what one doesn’t see in Japan is the nemesis of taxis—ridesharing. Uber, Lyft, and their various competitors have no place in the Japanese vehicle-for-hire market.

What has made Japan so resistant to the companies that have disrupted so many other countries? Firstly, Japan is a country steeped in tradition, and exogenous change is greatly suspect. Secondly, while Japan heavily regulates other industries, the taxi industry is in many ways less regulated. While other countries have protected their cabbies with closed markets of legally limited supply, the Japanese industry has an open system of scaling supply.

The Japanese cab industry has not always been regulated as stringently as it is today. In the decade after World War II, the Japanese government had little stake in cab drivers. This lack of oversight in post-imperial Japan led to aggressive cab drivers looking to profit off the need for transportation in the rebuilt country and its booming economy. The driving of these early cabbies became so savage that domestic magazines like Shukan Shincho ran articles like “The Terror of Kamikaze Taxis.” With this style of belligerent driving came inevitable fatalities. In 1956, Tokyo alone saw over 700 taxi-related deaths. When Hirofumi Igarashi, the captain of the University of Tokyo soccer club, was killed, politicians were pressured by the public outcry to enact regulations that laid the groundwork for the reserved culture of today’s Japanese taxis.

In the early 2000s, the Japanese government began to lessen taxi regulation. While licensing requirements remained daunting, limitations on the number of taxis working in given areas were removed. This period led to some consternation in the industry, with increasing competition as taxi companies beefed up their fleets. However, this deregulation also made the industry supply more adaptable and connected to consumer demand.

Uber has been available in Japan since 2018. However, unlike in the U.S., Uber is mainly used for airport transfers and occasional, longer-distance trips. Uber cars are usually more challenging to come by in Japan and are pricier than regular cabs. The main options are Uber Black, Uber Black Van, and Uber Taxi. The Uber app can be used to call a regular taxi, but it adds a surcharge to the standard cab fare, making it a pricier option than a regular cab.

Another reason Uber isn’t as popular in Japan is the country’s efficient public transit – in big cities like Tokyo and Kyoto; public transport is so effective that most people don’t even consider getting a cab or an Uber. When a cab ride is necessary, most people use a taxi app instead.

Uber’s entry into the Japanese market in 2018 was delayed compared to the rest of the world due to stringent regulations regarding cab drivers and operating a cab in general. To be a cab driver or operate a taxi in Japan, you need a special license and permits, and your car must meet specific high standards. These strict laws made it impossible for a business model like Uber to establish itself in Japan easily.

Uber in Japan has become more like a luxury car service with Uber Black and Uber Black Van options. The company wasn’t even able to operate in Tokyo until 2020, and this was only through an agreement with well-established taxi companies to expand as “Uber Taxi.”

Currently, customers can call regular taxis on the Uber app in addition to Uber Black or Van. Future policy changes suggest that ride-sharing services may be allowed at certain hours of the day when cabs are harder to come by. However, the government still maintains strict requirements for becoming a cab driver, including passing a special test.

Cab drivers work diligently in Japan, and there are no additional fees. Online payments are standard, and the country is safe for locals and foreigners. Japanese taxis are nicer, and apps can be used to call a cab or pay for a ride. Taxis are available even in the Japanese countryside, unlike Uber.

On April 7, 2024, Uber Japan announced it would launch its ride-hailing services, allowing people to use their personal vehicles for paid rides. This move is designed to cope with a need for more taxi drivers in urban areas and tourist spots in the country. With the government easing regulations, ride-hailing services are now allowed in some areas of Tokyo, Kyoto, Kanagawa, and Aichi prefectures on the condition that taxi companies manage operations. Customers need to make a reservation via a ride-hailing app and decide both the points of departure and arrival and fares beforehand. Services are only available during hours when vacant taxis tend to become scarce.

Uber Japan will connect drivers with partner taxi operators and customers. Several dozen vehicles will be available under the Uber Japan services, with plans to gradually increase the number of cars in service. The company aims to expand the area covered by its services, in line with the country expanding the regions where ride-hailing services are allowed in and after May. The Uber app will be available in 50 languages to attract foreign tourists. Speaking at a demonstration event in Tokyo, Shiro Yamanaka, head of Uber Japan, said that his company aims to contribute to securing means of transportation and promoting regional economic development.

On the same day, major Japanese taxi operator Nihon Kotsu and others launched their ride-hailing services in the 23 special wards and the cities of Musashino and Mitaka in Tokyo. Fares will be the same as those for taxis and will be paid, in principle, through cashless payment services. General drivers without a Class 2 driver's license, required to transport passengers in vehicles, will be allowed to offer rides if they have had no accidents over the past two years. The taxi companies will be responsible for providing safety guidance and vehicle maintenance.

Ride-hailing services will also be made available in eight districts in the metropolitan areas of Sapporo, Sendai, Saitama, Chiba, Osaka, Kobe, Hiroshima, and Fukuoka from May onward. Separately, Japan eased restrictions on paid passenger transport services by local governments and nonprofit organizations in underpopulated areas where taxis and buses are not available. Service providers can operate jointly with taxi companies to secure vehicles more easily. The government is discussing fully lifting its ban on ride-hailing to allow those other than taxi companies also to provide services. It is set to announce its decision as early as June. The taxi industry opposes the move out of concerns over intensifying competition.

Japan's taxi industry has evolved significantly since the establishment of Takushi Jidosha KK in 1912. From its humble beginnings with six Model T Fords, the industry has faced wartime consolidation, post-war regulation, liberalization, and re-regulation. Despite these changes, taxis remain a vital part of Japan's transportation landscape, reflecting the country's unique blend of tradition and modernity.