Uber has all but cornered the ride-hailing business, clocking 1 million rides a day in some markets. The demand is clear, and the next natural step for the company, announced Wednesday, is to reduce the barrier to entry for prospective Uber drivers by rejiggering its leasing program.
In a blog post, Uber revealed a new pilot program, Xchange Leasing, through which the company can lease cars directly to its UberX drivers. Till now, Uber had worked with automakers like General Motors and Toyota to lease cars to its drivers, giving them a discounted deal on monthly payments. According to Uber, a significant portion of the 160,000 UberX drivers in the U.S. have used the program:
We launched our Vehicle Solutions program 18 months ago in response to feedback from prospective driver-partners who wanted to join the Uber platform but didn’t have access to a qualifying uberX car. Since then, nearly 20,000 drivers have participated in the program and collectively taken home over $200 million dollars driving with Uber.
We’ve learned a lot—about when and where people drive, details about their vehicle needs, and how we can connect partners with options that work best for them. There is a lot of variability in how drivers use Uber, from the reasons they drive to the amount of time they spend on the platform. But one thing is clear: the key to flexible earnings is flexible financing.
The new initiative eliminates the middleman: Leases are issued and overseen by an Uber subsidiary, and target Uber drivers in particular, providing unlimited mileage, routine maintenance, and the ability to return a car after just 30 days with little penalty. (According to Re/code, the termination fee is $250.) Drivers also have the option of leasing used cars.
Uber is currently offering Xchange Leasing in California–specifically Los Angeles, San Francisco, and San Diego–as well as in cities across Georgia and Maryland. The company is partnering with more auto manufacturers, and is also testing out a weekly car rental option in Atlanta, Dallas, and Nashville.
Re/code points out, however, that Xchange Leasing is still pricier for drivers than leasing directly from a dealership, though Uber offers greater convenience and accessibility:
Uber’s new leasing terms still aren’t a great deal compared to going straight through a dealership. A driver leasing a 2013 Toyota Corolla, for example, would be paying about $385 a month through Uber, while they could lease a 2015 model car for $159 a month directly from the dealer. The upfront cost is higher, however, and breaking the lease would incur higher penalties.
Furthermore, Uber allows people with bad credit to lease a vehicle, those who might not be able to lease directly from an auto dealer themselves.