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Uber is ending its subprime car leasing program in the US (NOT WSJ ARTICLE)

Discussion in 'News' started by Ca$h4, Aug 8, 2017.

  1. Ca$h4

    Ca$h4 Well-Known Member

    Location:
    NYC
    Uber is ending its subprime car leasing program in the US
    Written by
    Alison Griswold@alisongriswold

    Uber plans to shutter Xchange Leasing, its US subprime car leasing operation, the Wall Street Journals reports. Uber executives decided to wind down Xchange, a wholly owned subsidiary, after realizing that the average loss per vehicle was 18 times what they had thought. From the Journal:

    The Xchange Leasing division had been estimating modest losses of around $500 per auto on average, these people said. But managers recently informed Uber executives that the losses were actually about $9,000 per car—about half the sticker price of a typical leased vehicle.

    Uber executives last month briefed a board committee on the unit’s growing losses and agreed to put an end to it, the people said.

    A source familiar with Xchange told Quartz that Uber and its board know big changes are needed at the leasing division, which employs at least 500 people. The person said Uber is exploring options that include a partnership or outright sale of Xchange, a reduction in the number of cities it serves, or layoffs in the unit with some employees switching to Uber proper. The Journal, citing sources, said the company aims to close or sell most of the business by the end of the year.

    Xchange owns and operates about 40,000 vehicles and has 14 showrooms in the US. The program was a unique bet for Uber, whose ride-hailing business was originally premised on an “asset-light” model of owning no cars and employing no drivers. But as Uber grew it also needed a way to get more drivers on the road, and in the US that meant helping more Americans who wanted to drive get the right kind of cars. Xchange started in July 2015 and had received a $1 billion credit facility from Goldman Sachs. Two years later the company has decided owning and operating vehicles as it did with Xchange was too capital-intensive to be sustainable.

    Uber has dabbled in other car-rental and leasing options. It partnered with Enterprise Rent-A-Car in late 2015 to let drivers rent a vehicle for $210 a week, a deal that makes little financial sense. That program still operates today, with rates starting at $225 a week plus taxes and fees. In Boston, it debuted a program with Zipcar earlier this year that let prospective drivers rent by the hour, starting at $12 an hour plus a monthly membership fee of $7—rates that practically guaranteed the driver would make less than minimum wage by working for Uber. In Singapore, the Journal reported last week that Uber had purchased and knowingly leased Honda SUVs that were subject to a recall. One of them caught fire.

    In New York, Uber for years rented and leased cars to drivers through a network of shady subprime auto-dealers that operate without much scrutiny. Uber halted lease referrals to those dealers in June after Quartz reported on its auto-financing practices.

    https://qz.com/1049117/uber-is-shutting-down-xchange-leasing-its-us-subprime-car-leasing-program/
     
  2. uberdriverfornow

    uberdriverfornow Well-Known Member

    Location:
    no
    the harder it is for new drivers to come aboard the better
     
    Chraniac, SOUFSIDE, ratethis and 20 others like this.
  3. Buckiemohawk

    Buckiemohawk Well-Known Member

    Location:
    orlando
    I just want to laugh, so hard its not funny. That's going to be less drivers on the road.
     
  4. KMANDERSON

    KMANDERSON Well-Known Member

    Location:
    Dallas, TX
    Driving:
    UberX
    Bring on the surge.
     
  5. Buckiemohawk

    Buckiemohawk Well-Known Member

    Location:
    orlando
    they wont be able to get a new flock of drivers either
     

  6. KMANDERSON

    KMANDERSON Well-Known Member

    Location:
    Dallas, TX
    Driving:
    UberX
    Uber exchange probably killed surge more then anything uber ever did.You got drivers driving 15 hr a day 7 days a week just to make a living.
     
  7. Maven

    Maven Well-Known Member

    Location:
    Connecticut
    Driving:
    UberX
    Only Uber could lose money after overcharging drivers huge sub-prime interest rates, often over 20%.
    What happens now to all the drivers that signed these deals?
     
  8. Kalee

    Kalee Well-Known Member

    Location:
    .
    I refuse to believe that Honest Uber could have been directly involved with "shady sub-prime auto dealers".

    I mean, do these shady practices really fit Uber's modus operandi?
    < smirk>
     
    2Cents, Yomann, Cynergie and 9 others like this.
  9. Mears Troll Number 4

    Mears Troll Number 4 Well-Known Member

    Location:
    Orlando-ish
    Driving:
    Taxi
    $9000 in loss per car, that probobly has a lot to do with vehicles losing value harder than they expected them to lose value.

    That ALONE could account for $9000 per car in loses.
     
    itsablackmarket and Kalee like this.
  10. majxl

    majxl Member

    Location:
    port washington ny
    <In New York, Uber for years rented and leased cars to drivers through a network of shady subprime auto-dealers that operate without much scrutiny.>

    Could there finally be more scrutiny ?
     
  11. Buckiemohawk

    Buckiemohawk Well-Known Member

    Location:
    orlando
    Most likely not. When you lease a car, its because you can't afford a car. Most leased cars have an average 30 mile per day. With Uber they couldnt charge for extra miles because you used the car and had to pay Uber over the app. The price is so low the average drive does easily 150-200 miles a day just to make some kind of money
     
  12. Maven

    Maven Well-Known Member

    Location:
    Connecticut
    Driving:
    UberX
    http://www.businessinsider.com/uber-employees-fear-layoffs-in-car-leasing-unit-2017-8
    Uber employees fear layoffs as the company plans to shut down its 500-employee car leasing unit
    August 8 2017 by Julie Bort

    Uber employees are nervous about an expected round of layoffs, according to a source familiar with the company.

    This after news broke that the company is considering shuttering its US car leasing business.

    The two-year old leasing program, founded under then CEO Travis Kalanick, is losing far more money than planned, reports the Wall Street Journal's Greg Bensinger.

    Uber currently has about 40,000 vehicles in the program, which it leases to drivers. The company had expected to lose about $500 per car but is losing about $9,000 per car, sources told Bensinger.

    The problem? Being in the car leasing business was harder than Uber imagined. All told, about 500 people work for the unit. Uber is apparently looking for a buyer for the unit, or even a partner for it, but short of that, the company will be make big changes, Quart's Alison Griswold reports. Some employees will find new roles within the company but layoffs are not out of the question, the source told Griswold.

    Kalanick was forced to step down as Uber CEO in June in the wake of a long series of scandals at the company. Uber is currently being led by a committee of 14 executives. Uber lost $2.8 billion in 2016 and this team is said to be trying to stem those losses.

    Uber did not immediately respond to a request for comment.
     
    Michael - Cleveland likes this.
  13. Uberyouber

    Uberyouber Well-Known Member

    Location:
    Dallas
    Yea let's give new cars to people with no job and bad credit. And then let's have them drive 3000 miles a month. Sounds solid...
     
  14. Michael - Cleveland

    Michael - Cleveland Moderator Moderator

    Location:
    Great Lakes
    Driving:
    UberSELECT
    You mean, just to make their lease payments!

    No car - and no work.
    Exactly where they were when they entered the program.
     
  15. westsidebum

    westsidebum Well-Known Member

    Location:
    los angeles
    This is it. This shows that Ubers rates are so low for drivers that leasing cars to drivers at zero profit to uber causes huge internal loses rather than a net benefit. Uber,claims we should use a fractional depreciation method for rideshare costs, which is bogus, and this,proves that even ubers is .most likely taking the full depreciation hit.
     
  16. Uberyouber

    Uberyouber Well-Known Member

    Location:
    Dallas
    Driving 10 hours a day just to have transportation to get your family around. Sad
     
  17. Michael - Cleveland

    Michael - Cleveland Moderator Moderator

    Location:
    Great Lakes
    Driving:
    UberSELECT
    https://www.theverge.com/2017/8/8/16112498/uber-phase-out-xchange-car-leasing-losses
    Uber is phasing out its subprime car-leasing division after massive losses
    Losses per vehicle ended up being 18 times more than Uber expected
    The VERGE by Andrew J. Hawkins Aug 8, 2017

    Uber plans to discontinue its subprime car-leasing operation as it currently exists, according to The Wall Street Journal. Uber created Xchange Leasing LLC in 2015 in a bid to disrupt the auto loan industry, but it will now sell off or close most of the business by the end of the year, the Journal reports.

    The decision to shutter its auto-lending division could result in hundreds of layoffs. Around 500 jobs could be affected, or around 3 percent of Uber’s total 15,000-employee workforce. Not everyone will lose their job, however. Some of those employees could be shifted to Uber’s customer service call centers, for example.

    A source familiar with the discussion said that Uber isn’t planning on completely abandoning its auto leasing ambitions. In the wake of Travis Kalanick’s resignation as CEO, the company is taking a new look at some of its more cash-losing enterprises in the hopes of becoming more financially responsible. Uber is weighing selling off some of Xchange’s assets as well as reducing the number of cities it serves.

    [ click to read the full article ]
     
  18. KMANDERSON

    KMANDERSON Well-Known Member

    Location:
    Dallas, TX
    Driving:
    UberX
    That probably a more accurate statement.
     
  19. uberdriverfornow

    uberdriverfornow Well-Known Member

    Location:
    no
    Uber is too stupid to realize that instead of not raising rates to prevent drivers from making money(which we know Travis and the rest of Uber hate so much), they could raise the rates and have plenty of drivers to pay for the lease program. Instead, the keep rates low and drivers don't have enough money to pay for the cars which have lost significant value. lol

    Remember, not just the value loss but I'm sure that includes the money they have to spend on each car...maintenance, reposessing, etc etc.
     
  20. corniilius

    corniilius Well-Known Member

    Location:
    Disneyland
    Less competition is always a good thing.
     
    KMANDERSON likes this.

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