Uber working on deal to sell US auto-leasing business Xchange to Fair: report
27 December 2017
Ride-hailing company Uber Technologies is working on a deal to sell its US auto-leasing business Xchange Leasing to startup digital car marketplace Fair, according to a person familiar with the matter, Reuters reported.
Uber said in September it was shutting down the auto-leasing business, which had run up huge losses. The last few months had seen Xchange Leasing unwind the business, which was started to lease new cars to Uber drivers, selling cars at auction.
The Wall Street Journal, which first reported the deal with Fair yesterday, said the net book value of Xchange Leasing's over 30,000 vehicles was roughly $400 million. In an earlier report in August, the paper said Uber was losing roughly $9,000 a car, 18 times more than previously believed.
As of August, Xchange Leasing had around 14 showrooms in the US, Reuters previously reported.
Uber launched Xchange Leasing in 2015 as it sought to attract new drivers who could not otherwise afford a car due credit issues. Xchange Leasing offered more attractive return and mileage limit policies than traditional car leases.
However, many Uber drivers complained of Xchange Leasing's predatory practices. They said they were forced to drive full time just to cover the cost of the car, with little or no profit left over due to Uber's exorbitant rates.
Fair is a car marketplace cofounded by industry veterans Scott Painter, the former CEO of TrueCar, and Georg Bauer, the former VP of finance at Tesla and BMW. Fair is trying to change how the car-leasing industry works by allowing people to lease cars on the basis of the amount of money they are willing, and qualified, to spend, and then letting them return the car anytime they want at five days notice. The approval process as also the car shopping to the payments is done through an app.
The Journal did not offer any figure as to the amount Fair might have spent to acquire Uber's leasing unit. At the time of the sale, Uber had about 30,000 cars in the programme worth around $400 million, according to the Journal. However, under the deal, Uber will take a stake in Fair and the startup will become an exclusive partner with Uber, offering drivers the ability to lease cars.