Uber is shutting down its auto-leasing subsidiary, CNBC is reporting, as the company’s new CEO Dara Khosrowshahi looks to focus on improving Uber’s profit margin.
“We have decided to stop operating Xchange Leasing and move towards a less capital-intensive approach,” a spokesperson told The Verge.
“We have decided to stop operating Xchange Leasing.”
Uber signaled that it was willing to phase out its car-lending business last month, after The Wall Street Journal reported that the company was losing an average $9,000 per vehicle, which is around 18 times more than the company expected, in addition to being about half the sticker price of a typical leased vehicle.
But at the time, Uber signaled that it wouldn’t completely abandon its auto-leasing ambitions. In the wake of Travis Kalanick’s resignation as CEO, the company is taking a new look at some of its more cash-losing enterprises in the hopes of becoming more financially responsible. Uber was weighing selling off some of Xchange’s assets as well as reducing the number of cities it serves.
Now, Khosrowshahi appears willing to cut Uber’s loses and simply cease operations. The business, a wholly owned unit of Uber, had operations in US cities including Los Angeles and Atlanta, and leased cars such as the Ford Focus and Nissan Altima.
Around 500 people could be affected by the shutdown, or about 3 percent of Uber’s 15,000-employee workforce. The company says it plans to help out as many employees as it can with résumé building, interviewing skills, and recruitment efforts. Not everyone will lose their job, however. Some of those employees could be shifted to Uber’s customer service call centers, for example.