Uber’s new plan to get you behind the wheel
It’s pretty obvious-- if you want to work for Uber, you need to have a car. So, the popular app-based ride service is trying to make it easier to get folks behind the wheel by offering direct leasing of cars.
Previously, Uber partnered with carmakers and lenders to provide leases at a discount. The company says 20,000 drivers took advantage of that. But now its new pilot program, called Xchange Leasing, eliminates the middle man. The leases will be administered by an Uber-owned subsidiary and drivers get free maintenance, unlimited mileage and flexibility to bring their vehicles back without paying a hefty penalty.
The program is being tried out in California, Georgia and Maryland.
Kim Kovacs, Partner at Hardesty, LLC, thinks it’s a wise move on Uber’s part.
“Offering an unlimited leasing program is a really smart idea,” she says. “That encourages people to be an Uber driver but also to take more rides if they have an unlimited program.”
Yahoo Finance Senior Columnist Michael Santoli believes Uber recognizes it has a real need to do this.
“It’s an acknowledgement that if they want to get to the scale that their ambitions hold, they have to have some sort of a financing role,” he argues. “They have to promote a constant stream of new drivers. And they’re big enough now they can do it directly, they don’t have to simply be a middle man.”
Plus, Santoli thinks it was pretty much inevitable.
“A financing role was always likely in Uber’s future,” he adds. “They’re embracing it now.”
Get the Latest Market Data and News with the Yahoo Finance App
Kovacs wonders if this move might help Uber after the California Labor Commissioner ruled last month in favor of a driver who claimed he was an employee, not a contractor, for the company.
“There are 160,000 Uber drivers just in the state of California alone, and if we have a class action lawsuit pending, that’s kind of an issue for Uber” she explains. “Now is this swinging the pendulum more in a way of being more of an employee relationship as opposed to a contractor relationship?”
Santoli doesn’t expect Uber to make a lot of money with the Xchange Leasing program.
“I don’t think it’s going to be run to be profitable as a stand-alone,” he points out. “It’s much more going to be just to accommodate the core business.”
And Kovacs feels that the kind of “core business” Uber offers is something a lot of people are looking for…and not just in California.
“This whole thing about the shared work environment and being independent is extremely popular right now,” she explains. “And you’re seeing that in various other markets, too.”
More from Yahoo Finance
Facebook’s 'Hail to the Chief' profit
Hollywood’s new money grows in a China grove
Millennials have a new suitor
