Uber Technologies Inc. is considering selling or consolidating its leasing program — Xchange Leasing — which provides subprime car leases to Uber drivers, a source familiar with the program told Auto Finance News.
The program, which debuted in July 2015 as a way to help provide vehicles to potential drivers, was also an initiative to encourage drivers to stay on the platform 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.
Earlier this month, Uber’s Singapore unit was accused of knowingly renting defective cars to drivers that were at risk of catching fire, according to a published report.
There are currently 40,000 vehicles and 14 showrooms in the U.S. alone, the unnamed source said. The plan comes 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, according to another published report.
There is a “good amount” of interest from outside parties to purchase Xchange Leasing, the source said, adding that layoffs are also highly possible but some people could also be reassigned within Uber.
Although speculative, one possible outside party could be SoftBank, through its investment division Vision Fund. SoftBank has been on a buying spree lately, including spending $100 million on 99, the largest ridesharing company in Brazil; buying a 4.9% stake in Nvidia; and investing in Boston Dynamics.
Not to mention that Masayoshi Son, SoftBank Group Corp. chief executive, expressed eagerness to invest in Uber Technologies Inc. or Lyft Inc. to gain access to the U.S. ride-hailing market. “We are interested in discussing with Uber,” the SoftBank chief said Monday at a news conference. “We are also interested in discussing with Lyft.” However, Son said he wasn’t sure what form this investment would take.
A SoftBank spokesperson declined to comment.
However, selling off the unit is not the only option the rideshare company is considering. Uber may scale back the geographic footprint of Xchange to just a few of the cities where Uber operates, according to the unnamed source.
This would not be the first time Uber has experienced a significant business change. Most notably — other than the ousting of Travis Kalanick, its founder and now former chief executive — the company gave up its corporate battle for dominance in China and Russia by swapping its local operations in China in exchange for a minority stake in Didi Chuxing, as well as forming partnership with Russian search giant Yandex and operator of the ride-hailing service Yandex.Taxi.
