Uber has shut down Xchange Leasing after learning it’s seriously in the red

Uber's ailing Xchange Leasing branch purchased by Fair.com

Xchange Leasing
Worawee Meepian/123RF
It’s no secret that Uber has always had trouble hanging onto money, but now that it’s being kicked out of a major market, the transportation giant is doing everything it can to cut costs. The latest casualty at Uber is Xchange Leasing, its American auto-leasing business. And given that the venture was losing 18 times more money on each vehicle than previously believed, it seems like the wise choice in this situation. Luckily, just a few months after deciding to shutter Xchange, Uber has found a buyer for the business — Fair.com.

As initially reported by the Wall Street Journal, Uber first began toying with the idea of closing down the business over the summer. The original hope was for a buyout, but the company appeared to get impatient a few months ago, and shut Xchange Leasing down without a buyer over the summer, affecting about 500 jobs. Simultaneously, however, Uber launched a sale process, and now, that process has reached its conclusion.

It’s unclear how much Fair paid for the leasing service, but the company itself is well versed in the rentals business. Its customers name a price for a rental vehicle, and Fair does what it can to match these customers with a car purchased from a local dealership. These vehicles can then be returned at any time. Thus far, the firm has raised around $85 million in equity, and has racked up $1 billion in debt (sound familiar?).

 “We have decided to stop operating Xchange Leasing and move toward a less capital-intensive approach,” a spokesman confirmed to the Journal back in September. Originally begun in 2015 under ex-CEO Travis Kalanick’s leadership, the leasing program was bolstered by an investment of around $600 million. Uber hoped that this initiative would make it easier for the company to recruit drivers who would otherwise be unable to provide their own vehicles.

Unfortunately, this didn’t work quite as planned, as the Journal reported many drivers returning the leased cars in “poor shape, damaging their resale value.” Ultimately, the company was forced to place drivers in increasingly expensive leased vehicles, which meant that the drivers had to work longer hours in order to pay back the lease, thereby creating more wear and tear, and perpetuating a vicious, net-loss cycle.

By July, Uber realized that Xchange was in the red by about $9,000 for every vehicle in the fleet (previous estimates suggested this figure was just $500). There were a total of about 40,000 cars in the fleet, which represents a whole lot of debt.

Hopefully, the sale of the business will do something to negate that red zone.

Cars

Can electric motors finally make three-wheeled cars great?

Every few years, someone tries to sell a three-wheeled vehicle to Americans. Historically, it hasn’t gone very well. We’ve got our suspicions about why people don’t buy trikes, and they boil down to this: a trike is just not a real…
Outdoors

Is Uber planning to put its self-driving tech into bikes and scooters?

Uber reportedly has its eye on building autonomous electric bikes and scooters that ride to a user when summoned by an app. The technology could also be used to make its two-wheelers safer with obstacle avoidance systems.
Cars

Lyft and Aptiv’s self-driving car program has come a long way (but not far enough)

Many companies talk about self-driving cars, but Lyft and Aptiv are already using a fleet of them to transport paying customers in Las Vegas. Hop in for a close look at the tech of autonomous cars, and the challenges they face.
Cars

Driving Daimler’s 40-ton eCascadia big rig isn’t just fun, it’s electrifying

Daimler Trucks brought its all-electric eCascadia semi-truck to the 2019 CES, and invited us to take the wheel. What does it feel like to drive one? Simply electrifying, of course.
Cars

Ford’s Mustang-inspired electric crossover will spawn a Lincoln luxury version

Lincoln will get its own version of parent Ford's first mass-market, long-range electric vehicle. While Ford's version will have styling inspired by the Mustang, Lincoln will take a more traditional approach.
Home Theater

Spotify adds simplified Car View mode for Android users

What was once just a test is now a reality: Spotify is rolling out a new, simplified in-car user interface for all Android users called Car View, which automatically engages when the app detects a car Bluetooth connection.
Cars

Boutique carmaker Karma Automotive, legendary design firm Pininfarina team up

Karma Automotive is partnering with legendary Italian design firm Pininfarina on future luxury cars. The first product of that partnership will appear later this year, Karma said, without offering other details.
Cars

Sibling rivalry: 2019 BMW Z4 takes on the 2020 Toyota Supra

BMW and Toyota forged an unlikely partnership when they set out to build a sports car platform together. Here, we examine the similarities and differences between the 2019 Z4 and the 2020 Supra.
Cars

Tesla cuts workforce by 7 percent, ends referral program to trim costs

Tesla has announced plans to trim its workforce by seven percent, and it will end the referral program that rewards customers who help it sell cars. These measures are ways to cut costs and boost profits.
Cars

Worried about commuting in winter weather? Nissan has the answer

The Nissan Altima midsize sedan is now available with all-wheel drive. To advertise that fact, Nissan's Canadian division slapped some tank-like tracks on an Altima to create a one-off show car.
Emerging Tech

Too buzzed to drive? Don’t worry — this autonomous car-bar will drive to you

It might just be the best or worst idea that we've ever heard: A self-driving robot bartender you can summon with an app, which promises to mix you the perfect drink wherever you happen to be.
Cars

Michigan OKs digital license plates with Rplate’s connected car platform

The state of Michigan approved the use of digital license plates on motor vehicles registered in the state. Reviver Auto, the manufacturer of the Rplate connected car platform, worked with Michigan's Department of State to pass the bill.
Cars

This Chevy Silverado pickup truck is made from more than 300,000 Lego bricks

To promote The Lego Movie 2: The Second Part, Lego and Chevrolet teamed up on a life-size replica of the automaker's Silverado pickup truck made from more than 300,000 plastic bricks.
Cars

Prices for using Tesla Supercharging just skyrocketed

Tesla is updating their Supercharging pricing based on local electricity rates and customer demand, which has lead to an increase in charging costs by as much as 33 percent in some regions.