back to article Uber bros kill car leasing program after losing nine grand per vehicle

Uber is killing off its car leasing program after being whacked with huge losses in the division. The dial-a-ride broker will drop its Uber Xchange leasing program after it was found that the project was blowing as much as $9,000 per car, The Register understands. Launched in 2015, Uber Xchange lets Uber drivers who don't …

  1. kain preacher

    I don't know why every one is so down on uber. My friend makes makes $15,000 driving for Uber. She has sex with the clients in the back seat. She then sends the pictures and the bill to their place of work.

    1. Anonymous Coward
      Anonymous Coward

      Yeah, I guess driving to "customers" generates more revenues than waiting at the border of a road...

      I'm surprised Kalanick didn't launch UberXXX in some places like Las Vegas, for example.

      1. kain preacher

        Because Proposition is not legal in Clarke county. Ok direct sex is not legal, a company can screw you .

    2. Anonymous Coward
      Anonymous Coward

      My friend ....

      My sarcasm app didn't flag this for me - it must be true.

      1. kain preacher

        Re: My friend ....

        wow it made it past your sarcasm and bullshit app. I must be better than I thought .

    3. Swiss Anton

      Re: My friend ....

      My friend does the same thing, but he makes $175,000 a year.

  2. Anonymous Coward
    Anonymous Coward

    I wonder if this is an early sign of the risk being run by many of the major car manufacturers with their personal car purchase schemes, i.e. overestimating resale values.

    1. werdsmith Silver badge

      Overestimating resale values

      Self-fulfilling. The growth in PCP and PCH car deals will at some point lead to a glut of hand-back vehicles which will flood the used car market and drive down prices.

      1. paulf
        Alert

        Re: Overestimating resale values

        This has been in the media recently as these PCP and PCH deals have been flagged up by financial regulators as an area of growing concern: Car finance deals: Do they spell trouble?

        From that article: "Here is a fascinating conundrum: The price of new cars has gone up significantly in the last five years, yet they have become cheaper to drive.

        The answer lies in the creative genius not of the car designers, but the financial engineers who invented a new way to borrow money."

        Sub-prime mortgages offered a new way to borrow money and look how that worked out when the house of cards came tumbling down so those opening sentences should strike fear into anyone who remembers the crash of 2007!

        1. Swiss Anton

          Re: Overestimating resale values

          and if the vehicle is a diesel, then its residual value will be even less than that predicted by the financiers

    2. Charlie Clark Silver badge

      Sales to rental / leasing operations is a keystone of the car makers business not least because losses incurred helped reduce the tax bill. That said, the reason US car sales are down recently is mainly due to a reduction in these kind of sales.

      Uber loves to burn money so $ 9000 a car doesn't seem that bad and to pretend that they've only just realised what the full cost is sounds like complete bullshit. I suspect the decision is more related into not looking like an employer after all car deals are extremely common employee perks with attendant tax rules.

  3. Sorry that handle is already taken. Silver badge

    it was found that the project was blowing as much as $9,000 per car

    Do we know what the average is though?

  4. Anonymous Coward
    Anonymous Coward

    There was am interesting program on TV a few days ago

    on how the inflation earnings projections peddled by Uber which then failed to materialise were leading to muliple cases of suicides of Uber drivers in India who had been conned into entering into this scheme and found themselves in escalating inescable debt liabilities.

    1. JLV
      Headmaster

      Re: There was am interesting program on TV a few days ago

      Maybe you meant "inflated"? Unless the dismal science is even more depressing, and much more carefully followed, there :(

    2. Dan 55 Silver badge

      Re: There was am interesting program on TV a few days ago

      Why were you downvoted for this?

      Uber themselves offered cars on the never never then lowered driver payments (i.e. wages) so it was impossible for them to pay the cars off.

      Result: Drivers saddled with debt.

      Kind of a big deal in India when you look at people's average income.

      Uber are cunts. All of them.

      1. Anonymous Coward
        Anonymous Coward

        Re: There was am interesting program on TV a few days ago

        "Uber are cunts. All of them."

        I cannot possibly agree with this. One is nice, the other is nasty.

      2. Korev Silver badge

        Re: There was am interesting program on TV a few days ago

        Why were you downvoted for this?

        I was wondering the same too. Maybe the downvoter forgot that they were voting on the post and not what the post describes.

      3. Anonymous Coward
        Anonymous Coward

        Re: There was am interesting program on TV a few days ago

        "Uber themselves offered cars on the never never then lowered driver payments (i.e. wages) so it was impossible for them to pay the cars off."

        Not quite. Uber kept employing (in the most nebulous sense) more and more drivers in a given area so the average income of the drivers fell below the amount required to pay the monthly car hire purchase bills.

        Uber obviously knew full well what they were doing and so they were either indifferent to their drivers plight or - tinfoil hat on - it was a malicious act in because someone in Uber India had some backhanders going on with the car leasing companies with regards to repossesing the vehicles. But as we know, there's almost no corruption in India, absolutely not, its a real straight up country. Yessir.

  5. David Roberts
    WTF?

    No word on

    Why they are losing money.

    Car leasing isn't a new thing so pricing and residuals should be pretty well known.

    Are the losses due to defaults on the payments? Less income than predicted and resale value doesn't cover the outstanding loan? Or just incompetence?

    1. Warm Braw

      Re: No word on

      Car leasing isn't a new thing

      Neither is running a taxi service, but they're losing billions doing that, too.

      The obvious conculsion, given the insights that have been revealed to us this week, is that Uber must be run by feminists.

      1. Peter2 Silver badge

        Re: No word on

        Neither is running a taxi service, but they're losing billions doing that, too.

        Which AFAIK is because Uber charges less to the customer than it pays to the taxi operator to drive down prices.

        As soon as Uber gets beaten into following laws where they operate, and stops charging less than it costs to run the service then their prices go up to that of the competition, and they get obliteriated by that competition.

        1. P. Lee

          Re: No word on

          >As soon as Uber gets beaten into following laws where they operate, and stops charging less than it costs to run the service then their prices go up to that of the competition, and they get obliteriated by that competition.

          Here's the problem with Cloud services. The name is everything and its winner-take-all. How does a new taxi service get noticed in the huge morass of app-store applications presented on a small screen. Once the competition is gone, you squash all future competition by the threat of price reduction, using past profits to fund the loss. We need competitive markets, not free-at-all-cost markets. With an application-based services, not even geographically local competition has much of a chance of succeeding.

          1. Peter2 Silver badge

            Re: No word on

            Here's the problem with Cloud services. The name is everything and its winner-take-all. How does a new taxi service get noticed

            Google -> "Taxi in "$location".

            Doing that in a moderate sized town resulted in a websites for two established companies that both offer an app download, online booking, corporate accounts and a telephone number if you just want to ring them and book.

            I can fully beleive that some people will struggle with that, but it's hardly winner takes all otherwise the competition wouldn't exist.

      2. notowenwilson

        Re: No word on

        "Neither is running a taxi service, but they're losing billions doing that, too."

        Well said. Eventually people will realise that Uber is just a taxi service operating at a loss with a shiny app and no morals.

    2. Anonymous Coward
      Anonymous Coward

      Re: No word on

      The drivers can't get a loan through traditional means. The drivers make very little money. The drivers are in a very competitive marketplace. The drivers are part of the gig economy and are often desperate and often 1st gen immigrants.

      These aren't the people who normally get a good credit score and so lending them tens of thousands of dollars so that you can screw them over is likely to result in more than average default and bankruptcy. You can't then add more to the loans of the good credit loanees as that would create an unsustainable amount of debt for them as well causing more of the same until your hole business model implodes (as it has done).

      Would have taken some basic economics to realise that this would be a failure before it was even rolled out.

    3. David Roberts

      Re: No word on

      Replying to my own post but have just been reading in Private Eye that the Personal Contract Plan market for cars is showing signs of repeating the sub-prime mortgage crash including the bundling of loans for resale as derivatives.

      Second hand car prices expected to tank as the 3 year loans come to an end and the cars are effectively dumped on a shrinking market. Which in turn tracks the property price crash with sub-prime mortgages.

      Mostly (informed) speculation at the moment but this could be a pointer.

  6. Chris G

    Basic business plan needed?

    The more (mostly bad, alright, all bad) things I hear about Uber the more amazed I am at their apparent market valuation.

    The only thing they seem to have done on the plus side of business is come up with a useable app.

    Otherwise, the whole thing seems to have been put together without the simplest of business plans or even an understanding of how businee really works.

    Even basic research shoud have revealed how well or not a car leasing plan would function, it's not as if such a thing is a new business model is it?

    If I were on the board at Uber I would seel out as quickly as possible, stick the money in an offshore account and sod off rapidly before there is no money.

    Regarding backseat sex; I worked as a cabbie in the '80s for 6 months and going by the offers even I got, there is likely a market for an UberSex app, but please do a bit of market research and make a business plan first.

  7. Cuddles

    Thought to be?

    "the hit was thought to be around $500 per car. When the true toll was calculated"

    Do they not have accountants? It should be fairly easy to know how much you paid out compared to how much you have coming back in. Was the $500 actually a prediction that turned out to be flawed, or did they really somehow manage to run the scheme for two years before anyone bothered to look at the actual cost?

    1. John Brown (no body) Silver badge

      Re: Thought to be?

      Considering the US obsession with "fiduciary duty" and the misapprehension that it means profits at all costs, the Uber style financial model and apparent lack of financial acumen makes me wonder just how many more fools (VCs) remain to be parted from their money. Is it an especially elaborate pyramid scheme?

      I can understand the predatory if legally dubious concept of running at a loss to kill the competition, but surely it's a tad risky to do that on a world wide basis rather than sticking to your home market to prove the concept first.

    2. Charlie Clark Silver badge

      Re: Thought to be?

      In other words: this isn't the reason you are looking for. Leased car == benefits in kind

  8. allthecoolshortnamesweretaken

    Uber's business plan is not having a (viable) business plan. Because "disruptive".

    The rest is classic mob tactics.

  9. Mike Moyle

    The more I hear about them, the more they seem Unter to me than they do Uber.

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