Uber shutters car-leasing program after losing lots of cash
The ride-hailing company says it's moving toward a "less capital-intensive approach" on car loans for drivers.
Uber closes down its car-leasing program.
Uber's US car leasing program will be no more.
The ride-hailing company confirmed Wednesday that it's shuttering Xchange Leasing, which leases cars to drivers who normally wouldn't qualify for a loan.
"We have decided to stop operating Xchange Leasing and move towards a less capital-intensive approach," an Uber spokesman said.
The company had been losing money on the program since it's inception. However, Uber discovered in July it was losing 18-times more than it originally estimated, according to The Wall Street Journal. It previously thought the loss was about $500 per car, but it ended up being around $9,000 per car. Uber announced last month it was planning to wind down the program.
Uber is one of the biggest ride-hailing services in the world with operations in about 70 countries and more than 2 million drivers. Uber has a variety of tactics to attract new drivers. Along with Xchange Leasing, it has sign-up and referral bonuses and low-price weekly car rentals. But, as the company continues to grow, it's having to rethink costs.
At a minimum, all cars on Uber's platform must pass a vehicle inspection, be from model year 2002 or newer and have four doors. Uber rolled out Xchange Leasing about two years ago after previously using third-party contractors to lease cars to drivers. Since it began, Xchange leased about 40,000 vehicles.
The program has experienced its share of controversy. Drivers reportedly said the weekly payments, which averaged around $126 per week, were subtracted from their paychecks, leaving them with little earnings. They also said when they totaled up their loan payments, they ended up paying much more than the actual cost of the car.
The closing of Xchange Leasing is expected to affect about 500 Uber employees, according to the Journal. That's roughly 3 percent of the company's 15,000-employee staff.
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