After initially looking to sell its 40,000 car leasing business, Uber is now shutting down Xchange Leasing. The fact that Uber is shutting the business shouldn’t be that surprising since the company is reportedly losing ~$9,000 per car (meaningfully more than the initial expected loss of $500 per vehicle). The company plans to honor its existing leases until they expire.
Since Xchange Leasing was only in 19 markets, certain larger markets (e.g. NYC) are not affected. UBER continues to work with relatively small local leasing companies to help drivers lease and rent cars.
Now that UBER has exited (and a previous subprime leasing partnership with Banco Santander ended in 2015), institutional capital may further fill the gap without having to worry about UBER directly offering cheaper leasing options.
On a more positive note beyond Xchange Leasing and some of the other recent negative UBER news (e.g. London license ban, surprise changes to the board, allegations of sexism, federal investigations, multiple lawsuits, increase competition, driver strike in France, etc.), this summer UBER exceeded the daily ridership of NYC’s yellow cabs (289,000 vs. 277,000). UBER and other ride hailing companies have access to over 61,00 cars versus 13,587 NYC TLC yellow cabs.
Castle Placement is an investment bank (founded in 2009) that raises raise equity and debt capital for companies in a variety of industries from our institutional investor network (>27,000 investors – PE/VC firms, hedge funds, family offices, asset managers, lenders, etc.).