Watch out: Ubers understood leasing30/07/2015
Most people have heard of Uber, and know what it is - it’s a taxi service that’s given traditional taxi companies a lot to think about. But actually, Uber says it’s something different to that, Uber says it’s an App, and the App is now creating its own leasing company. What Uber says it has learnt is that its drivers seek flexible earnings, and Uber sees the key to flexible earnings as flexible financing.
Early on they found that there were many wanting to become Uber drivers that didn’t have a suitable car, so Uber tied up with a couple of leasing companies as well as a short-term rental company, lobbed in discounts from car manufacturers and hence was able to grow the pool of drivers quickly. This was all happening in the US of course, here in the UK it would probably have got bogged down in the credit department, in personal guarantee land, or in sky high rates.
Since then, Uber has probably picked up the mechanics of what the leasing companies do, and seeing the shortcomings of their referral programmes came up with a new pilot program – Xchange Leasing – which is a leasing option administered by an Uber subsidiary and designed to fit with the flexibility that drivers need. They say that their Xchange lease is one of a kind, and offers value that traditional auto leases do not provide.
Car lessors should pay attention to this next bit, because unlike most multi-year leases that Uber says have high fees for early termination, drivers who participate in Xchange for at least 30 days will be able to return the car with only two weeks notice, and limited additional costs. The program allows for unlimited mileage and the option to lease a used car, with routine maintenance also included. These features combine to create a unique product. It just shows you the gap between what lessors come up with as innovation, and what businesses actually want, and sometimes those businesses prove that what they want is doable.
Xchange Leasing is currently operating in major metropolitan areas in Los Angeles, San Francisco, and San Diego and select cities in Georgia and Maryland.