Uber executives chose to wind down Xchange, a wholly owned subsidiary, after realizing that the average loss per vehicle was 18 times what they had thought.
Ride sharing giant Uber Technologies Inc. intends to close its USA subprime car-leasing unit to offset rising losses, the Wall Street Journal reports.
Uber executives were prompted to pull the plug on the auto-leasing unit in part because they recently came to a stunning realization: The average loss per vehicle was about 18 times what they had thought.
Putting aside the problems found in Uber's leasing efforts, as well as other subprime lenders now facing regulatory scrutiny, the ride-hailing company's program was more or less an unmitigated disaster, according to the WSJ report (emphasis ours). The Journal, citing sources, said the company aims to close or sell most of the business by the end of the year. Drivers, who Uber treats as contractors, have been critical of high lease payments. Last year, losses at Uber totaled nearly $3 billion, excluding the China business, which it sold last summer.
Kalanick was forced to step down as Uber CEO in June in the wake of a long series of scandals at the company. While conceived as a way to help new drivers get started, the program also left some drivers shackled with commitments they were unable to meet, Bloomberg reported previous year.
Earlier this month, the Journal reported that Uber's Singapore unit knowingly rented its drivers defective cars that were at risk of catching fire. The board's decision to remove the leasing unit has been strictly financial, the person said.