Uber May Sell Car-Leasing Unit

Ride-hailing service Uber Technologies Inc. intends to shut down or sell at least most of its money-losing car-leasing operations by year-end, sources tell The Wall Street Journal.

The company after realizing its Xchange Leasing unit has been losing about $9,000 per car, or roughly half the worth of the vehicle. Uber had though the business, designed to be a breakeven enterprise, was losing $500 per lease.

Xchange Leasing was launched in 2015 with a $600 million investment. Uber intended the service to help incoming drivers with poor credit histories obtain suitable cars. Drivers lease by the week and may return the vehicle on short notice after the first month. The unit operates in 24 cities and holds titles for almost 40,000 vehicles.

Soaring costs have prompted Xchange Leasing to hike its lease rates to more than $500 per month, significantly greater than comparable leases from a car dealer. The Journal’s sources say the higher fees pushed many drivers to work longer hours. Drivers also returned the vehicles in poor shape, thereby reducing their resale value.