Los Angeles: Uber has agreed to sell its sub-prime auto leasing business, Xchange Leasing, to Santa Monica car marketplace Fair.com, according to a Wall Street Journal report citing people familiar with the matter.
Terms of the deal were not announced, and it is unclear how Fair plans to incorporate Xchange Leasing into its own business. Fair declined to comment, and Uber did not respond to a request for comment.
Uber launched Xchange Leasing in 2015 with the aim of helping US drivers with spotty credit histories lease a car to drive for the ride-hailing company. The idea was that the more people were driving for Uber, the better Uber’s chances of reducing passenger wait times and increasing market share. The company charged drivers nearly $500 (Dh1,835) a month on a 36-month lease term and deducted payments from drivers’ earnings.
The program created problems for drivers who fell behind on lease payments. For some, it worsened their already poor credit. Others drove extra hours in an attempt to make the payments, adding wear and tear to the vehicles.
Despite the high lease fees, Uber lost about $9,000 per vehicle, the Journal reported, citing unnamed sources.
In September, Uber decided to cut its losses and shut and sell Xchange Leasing.
According to Tuesday’s Journal report, Xchange Leasing has more than 30,000 cars worth roughly $400 million. It said that as part of the deal, Uber is to take an equity stake in Fair and offer potential US drivers access to Fair within the Uber app.
Founded last year, Fair is an app-based marketplace that matches customers with cars based on each person’s budget. The start-up sources vehicles from partner dealerships.
Fair was founded last year by Scott Painter, the former chief executive of car pricing website TrueCar.
The start-up buys new and used vehicles from car dealerships and lists those vehicles in its app alongside each vehicle’s monthly payment. Customers can then choose a vehicle from the app, get approved for it within minutes, and pick up the vehicle from the dealership. There is no set lease term: Customers can return their vehicles to Fair with five days’ notice.