Ride-hailing company Uber is planning to shut down its US car leasing business Xchange Leasing after higher than expected losses, according to news reports.
Xchange Leasing was created in mid-2015 to provide cars to Uber drivers, reportedly targeting those who were subprime. The Wall Street Journal reported that Uber made the decision to shut down the operation after discovering losses per vehicle were significantly higher than it initially thought.
The WSJ said Uber had estimated that it was generating a $500 (£385) loss on each vehicle, but managers recently informed executives and shareholders that the true losses were 18 times higher.
In January, Uber came under fire for over-reporting its driver earnings amid claims its drivers had been charged up to $1,000 to enter lease agreements at higher costs and worse terms than initially advertised. The company was forced to pay $20m redress by the US Federal Trade Commission.
Xchange Leasing has approximately 40,000 vehicles in the US and 14 showrooms. The decision to close the programme, made on Tuesday, puts 500 jobs at risk, 3% of Uber’s total workforce. News reports indicate that there are some companies interested in purchasing Xchange Leasing outright.