US-based ride hailing firm Uber is looking to sell off its car-leasing business in the US, a highly capital-intensive business for the company.
According to a report in Reuters, the Xchange Leasing business, which has about 40,000 vehicles and 14 showrooms in the United States, is seeing interest from buyers who are considering outright buying it out.
The company is also considering other options including a partnership or winding down the unit but reducing its presence in various cities. That may, however, lead to lay offs.
The leasing business employs nearly 3% of Uber’s 15,000 employees. Meaning, as many as 500 jobs may be affected through this.
Uber has been losing a lot of money on this business. As per the report, Uber was losing nearly $9,000 per car on average, steeply above the previous estimates of around $500 per car.
Recently, Uber faced scrutiny after the company leased defective cars in Singapore that are prone to fires. The company borrowed capital from Goldman Sachs Group and other banks to purchase more than 1,000 defective Honda Motor vehicles from importers, according to the Wall Street Journal.
And this, Uber’s manager in Singapore were aware of. Honda has in fact recalled the Vezel models when it bought and leased them to drivers and at least one car burst into flames in January.
In India too, drivers have been suffering through the car-leasing program which have led several of them to abandon their cars as they are unable to pay back the EMIs, especially after Uber cut down incentives for its driver partners.
In fact, there were reports recently that thousands of financially distressed cab drivers in India registered with taxi aggregators Ola and Uber are listing their vehicles online for sale on platforms like OLX.
From prices ranging as low as Rs 50,000 to about Rs 9 lakh rupees, driver partners from cities like Gurgaon, Kolkata and Hyderabad have been trying to sell off their cars.
A quick search for “Ola” or “Uber” throws up plenty of listings on OLX.
Image: Elliott Brown via Flickr