After months of losing money — and weeks of speculation — Uber announced yesterday that it was beginning to wind down its subprime leasing program in the U.S. market.
But the rideshare company is still pursuing buyers, a company spokesman told AFN, adding that Uber will still service its portfolio, even as originations cease.
“Leases will continue until drivers decide they want to return it, which could be with two weeks’ [notice] or when a lease expires,” the spokesman said. “All that’s changing for drivers is they can’t get new leases or renew a lease.”
The international operations of Xchange Leasing will not be affected at this time, he said.
Uber’s plan to consolidate or sell Xchange Leasing would be a “smart move,” Grayson Brulte, a consultant and president of Brulte & Co., told AFN last month. However, it was unlikely another company would acquire the unit, because subprime leasing is a business “about to burst,” he added.
The Xchange 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 their leases.
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 The Wall Street Journal. Initially, Uber considered scaling back the geographic footprint of Xchange to just a few of the cities where Uber operates, in addition to mulling an outright sale.
If the shutdown of Xchange is finalized, about 500 jobs at Uber will be impacted.
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