Uber, which under new CEO Dara Khosrowshahi is trying to pare back its losses, is shuttering its car-leasing program after realizing it was losing 18 times the amount of money per car than it expected to, Recode has confirmed.
The ride-hail company previously expected to lose $500 per car that it leased to drivers who didn’t have good or any credit, as the Wall Street Journal first reported. But managers recently informed executives and the board that the program, called Xchange leasing, was costing Uber around $9,000 per car.
“We have decided to stop operating Xchange Leasing and move towards a less capital-intensive approach,” an Uber spokesperson told Recode.
While the company has managed to curb some of its losses, it’s still losing more than half a billion dollars a quarter. In the second quarter of this year, Uber lost $645 million, compared to $708 million in the first quarter.
The company is seeking a buyer for the business — which includes 40,000 cars and the showrooms for the cars — but has had little luck so far.
The company launched the Xchange leasing subsidiary two years ago in an effort to get drivers with bad or no credit to drive for Uber. Today, the subsidiary employs 500 mostly full-time staffers. It’s unclear if they will be a part of the acquisition if Uber ends up finding a buyer.
Johana Bhuiyan is the senior transportation editor at Recode and can be reached at email@example.com or on Signal, Confide, WeChat or Telegram at 516-233-8877. You can also find her on Twitter at @JmBooyah.
In its most mature markets, Uber has the difficult task of finding new pools of drivers who can qualify to drive on the platform. By lowering the credit qualifications, Uber was trying to open up its platform to more drivers who would otherwise not be able to lease a car.
Now, the company has shifted more of its focus to driver retention in an effort to maintain or grow its market share in places where they’ve reached massive scale like in the U.S.