Uber Technologies Inc. plans to wind down its U.S. subprime car-leasing division to stem unsustainably high losses, according to people familiar with the matter, a major retreat just two years after starting the business.
The ride-hailing company is aiming to close out or sell most of the business by year-end, these people said. As many as 500 jobs could be affected by the exit of the Xchange Leasing program, representing roughly 3% of Uber’s 15,000-employee staff.
Uber executives were prompted to hit the brakes on the auto-leasing unit in part because they recently came to a stunning realization: The average loss per vehicle was about 18 times what they had thought.
The Xchange Leasing division had been estimating modest losses of around $500 per auto on average, these people said. But managers recently informed Uber executives that the losses were actually about $9,000 per car—about half the sticker price of a typical leased vehicle.
Uber executives last month briefed a board committee on the unit’s growing losses and agreed to put an end to it, the people said.