Uber is considering its options regarding what to do with its Xchange Leasing program for providing subprime car leases to drivers on its service, according to a source familiar with the program. The Wall Street Journal reported that it planned to close the operation earlier on Tuesday, and we’ve confirmed that it’s looking at a number of options for how to proceed, including an outright sale of the business to outside parties.
Uber and its board decided that Xchange was in need of significant changes given its current operating realities, and the WSJ report claims that it is causing “unsustainably high losses” for Uber. The Xchange program was introduced by Uber two years ago as a way to help provide vehicles to potential drivers who couldn’t necessarily secure one through more traditional means.
Our source says that Uber still wants to ensure vehicles have a cost-effective way to secure vehicles, but says the company also realizes it has to be done in a way that is sustainable from a financial standpoint. This is similar in motivation to Uber’s deals with Didi and Yandex in terms of finding a strategic way to stem outbound cash flow, the source claims.
As mentioned, an outright sale of the leasing operation is one possible outcome, and outside parties have already shown interest in such a sale according to our source. It could also involve scaling back the geographic footprint of Xchange to just a few of the cities where Uber operates. The options on the table could involve layoffs, but might also involve bringing Xchange employees in-house to fill vacancies at Uber proper.
Uber has also partnered with external companies for short-term rental and leasing options for cars used to ferry passengers, and it sounds like offloading its own ownership of these vehicles is the preferred path, in order to defray the cost requirements that come with owning and operating a fleet.