Uber will stop leasing cars to drivers in the US
It's now harder to drive for Uber if you don't already own a car.
Those rumors of Uber shuttering US car leasing for drivers were true. A spokesman has confirmed to the Wall Street Journal that it's closing Xchange Leasing in favor of a "less capital-intensive approach." To put it another way, the initiative cost far too much money -- the earlier leak had it losing about $9,000 per car versus the $500 it expected. The company hasn't said what it will do to replace the American program, although this isn't likely the end of leasing worldwide. Its program in southeast Asia is likely to continue despite problems with defective vehicles.
The leasing program started in 2015 as a bid to attract drivers that couldn't buy cars given their poor or non-existent credit ratings. As the WSJ explains, though, the program had a knock-on financial effect. As these were high-risk drivers, they had to pay high leasing fees -- and that meant working long hours that wore down the cars and hurt their value. Also, Uber's reliance on existing dealers led to salespeople upselling drivers on cars that affected their earnings.
There wasn't much choice in the matter when Uber can't afford to lose money indefinitely. However, it does mean that Uber will have to shift its attention more toward other incentives, such as allowing tips. Ultimately, its main concern is having enough drivers on the road -- that can include giving existing drivers a reason to stay. Unfortunately, that also makes it considerably harder to drive for Uber if you don't already own a car.
