Startup Fair plans to purchase Uber Technologies Inc.’s U.S. subprime unit Xchange Leasing, according to a published report.
The net book value of Xchange Leasing’s more than 30,000 vehicles was roughly $400 million, The Wall Street Journal reported Tuesday.
Fair — which offers a used-car, no-commitment leasing app — is expected to give jobs to about 150 of the 500 employees at the leasing company. The deal is expected to close early next year, and Uber plans to offer potential drivers in the U.S. access to Fair to lease a car, according to the WSJ.
Fair and Uber did not respond to a request for comment by presstime.
Xchange Leasing, which debuted in July 2015 to help provide vehicles to potential drivers, was intended to encourage drivers to stay with Uber in order to pay off the lease. The program has attracted criticism for being “predatory,” and has been accused of causing some people to abandon their vehicles or fall into debt.
In September, Uber announced it planned to shutter the program and began to unwind the business, selling cars at auction. The plan to shut down Xchange came after Uber executives were informed that losses were on average $9,000 per car, much higher than the previous estimates of around $500 per car.
However, the rideshare company was still pursuing buyers, Auto Finance News reported in October.
Fair, which launched in early September, allows customers to shop for a car based on a prequalified monthly payment range tailored to the borrower’s budget, and includes the flexibility to walk away from the vehicle with only five days notice.
Separately, Fair announced in late October that it was closing a strategic funding round for an undisclosed amount and additionally secured nearly $1 billion in capital from a group of institutional investment banks.
The funding round was led by BMW i Ventures unit, and included capital from other strategic investors, such as Penske Automotive Group. BMW i Ventures’s recent investment in Fair might evolve into a “strategic business partnership,” Fair Co-Founder Georg Bauer said at the 2017 Auto Finance Summit in late October.
“There are ways of turning this monetary investment into a strategic business partnership,” Bauer said, adding that, for now, it is “a starting point” for the companies.
