Uber is scaling back on USA vehicle leases as expenses pile up

Uber is scaling back on USA vehicle leases as expenses pile up

Uber has always been criticized for lending practices created to reel in prospective drivers to the ride-hailing company, particularly their program to push people into subprime auto loans. In January, Uber paid $20 million to settle a U.S. Federal Trade Commission lawsuit that said Uber made false or misleading claims about its leasing program. But as Uber grew it also needed a way to get more drivers on the road, and in the USA that meant helping more Americans who wanted to drive get the right kind of cars. In June, Quartz looked into Uber's leasing efforts with third-party vendors in New York City and found an array of unseemly tactics.

Uber Technologies Inc. will close or sell its car-leasing subsidiary, sources close to the decision said Tuesday.

This is according to a report from CNBC who have heard from their sources that Uber is planning to shut down its vehicle leasing business, or alternatively they could be thinking of selling it off, or maybe consolidate it to make it more efficient.

Xchange's leasing program, which has over 40,000 vehicles in operation, has seen major losses since its launch. The Xchange Leasing division had been projecting losses of around $500 per auto on average, but managers informed Uber executives that the losses were about $9,000 per car, roughly half that of a typical sticker price on a leased vehicle. The stringent move could come as Uber executives have realised that they're losing far more money on leases than ever planned and that the business is too capital-intensive to be sustainable.

The source familiar with Xchange said the company and its board of directors chose to significantly alter Xchange in order to provide vehicle options to prospective drivers.

Assuming this is true, clearly this is not a very good business model.



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