It seems that the car lease business is harder than Uber expected. The figures are astounding: the company is losing 18 times more money per car than projected. The division, called Xchange Leasing was founded in 2015 to finance those drivers who did not qualify for a bank credit.
The Xchange Leasing division had been estimating modest losses of around $500 per auto on average. 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. (WSJ paywall)
Uber is exploring options that include a partnership or direct sale of Xchange, a reduction in the number of cities it serves, or layoffs in the unit with some employees switching to Uber. The Journal, citing sources, said the company aims to close or sell most of the business by the end of 2017.
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.
Owning the fleet is no good
Another place where Uber tried to make a business using owned vehicles is Singapore. The endeavour flopped when news surfaced about recalled vehicles were still in use ignoring the service recalls.
Uber managers in Singapore were aware of the Honda recall when they bought more than 1,000 defective Vezels and rented them to drivers without the needed repairs, according to internal Uber emails and documents reviewed by The Wall Street Journal and interviews with people familiar with Uber’s operations in the region. (Lucian Vinatoriu)