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Uber Gets Run Over by Its Own Subprime Auto Leases

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Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#61

Post by ethbro »

FTA wrote: post #30
CamelCaseName wrote: post #5

The idea that one could lease a vehicle from Uber, at a significant loss to Uber, then turn around and use that vehicle to drive for Lyft, is absolutely hilarious.

Yet another example of VC ending up subsidizing America. We could just cut out the middleperson and go to basic income paid for by VCs.

Except in this instance, the beneficiaries are those unable to acquire a car loan. So a very different demographic from the usual crowd benefitting from VC largesse.

I don't think the irony should be lost.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#62

Post by JshWright »

jaclaz wrote: post #60
JshWright wrote: post #29

Earlier quoted context omitted.

> a 2.5 years (high mileage) old Corolla may still have some minimal residual value, let's say US$ 1,500. Even on the wholesale market, I'd wager it's several time that amount...

I don't know, but I would expect 7,500 to 10,000 miles per year on a normal car, hence that would have in a 130 weeks/2.5 years some 25 thousands miles top. If (as it is reported here and there) an Uber driver needs to make 3,000 miles per month, the car after 30 months would be more likely to be in the 90,000 - 100,000 range, i.e. the same as a 10-12 years car, i.e. an "end of life" car. Even if only 2.5 years old,…

A 2014 Corolla with 120k miles in "average" condition books at $5-7k "trade-in" value (which tends to map pretty well to wholesale value).

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#63

Post by spraak »

Clanan wrote: post #36

Uber won't just be out the $360 million on the cars. They'll be out the 40,000 drivers who may not be able to get another leased car.

I'd imagine the drivers being really upset... because I assume they'd also use the vehicle for personal things as well.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#64

Post by bogomipz »

aetherson wrote: post #34
bogomipz wrote: post #25

>"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." So their accounting was off by almost two orders of magnitude? My first thought was "how was this even allowed to happen?" But then I read: >…

In all fairness, 2 orders of magnitude over $500 is $50,000. They're a lot closer to 1 order of magnitude ($5,000) than two.

Sorry yes, definitely not a factor of 100. That's what I get for being up late :)

But still it's greater than even a single order of magnitude which is a substantially large accounting discrepancy.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#65

Post by pbreit »

The author mentions "sub-prime" borrowers several times but I don't see any indication that borrower quality had anything at all to do with Uber's problem.

I always thought sub-prime borrowers were unfairly blamed for the mortgage crisis. There were a lot of average & prime borrowers walking away from ridiculous "nothing down, 1%" mortgages.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#66

Post by avs733 »

beambot wrote: post #59
FTA wrote: post #30

Earlier quoted context omitted.

Yet another example of VC ending up subsidizing America. We could just cut out the middleperson and go to basic income paid for by VCs.

Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) For people who don't want to look it up... Some of the biggest are pension funds! It's not just high net worth individuals or companies, it's also mom & pop retirement funds. https://www.quora.com/Who-are-the-biggest-investors-limited-...

it is a big circle of value extraction by as many members of the capitalist class as possible...

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#67

Post by jaclaz »

JshWright wrote: post #62
jaclaz wrote: post #60

Earlier quoted context omitted.

I don't know, but I would expect 7,500 to 10,000 miles per year on a normal car, hence that would have in a 130 weeks/2.5 years some 25 thousands miles top. If (as it is reported here and there) an Uber driver needs to make 3,000 miles per month, the car after 30 months would be more likely to be in the 90,000 - 100,000 range, i.e. the same as a 10-12 years car, i.e. an "end of life" car. Even if only 2.5 years old,…

A 2014 Corolla with 120k miles in "average" condition books at $5-7k "trade-in" value (which tends to map pretty well to wholesale value).

Good, then if we use the lower US$ 5,000 as a reference, the "complete cycle" turns to be actually advantageous for Xchange.

15,860+5,000=20,860 against a cost (adding the costs of "basic maintenance", assuming an intervention every 5,000 miles of 100 US$ each) of 16,500+20*100=18,500

That is 2,360 over 18,500 in 2.5 years, roughly 13% or 5%/year interest (excluding administrative/managing costs).

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#68

Post by montecarl »

jaclaz wrote: post #55
toast0 wrote: post #37

Earlier quoted context omitted.

Taxi style use generally qualifies for shorter oil change intervals. Including that in the lease probably helps the vehicles stay maintained and resellable.

Naaah, that depends on quality of oil (and of course characteristics of the engine), as hinted it is a long standing dispute. A number of people (particularly in the US, but not only) change their oil every 3-5,000 miles for reasons like: - my father always changed oil every 3,000 (or 4,000 or 5,000) miles - a friend of mine who races changes it every 2,500 miles so changing it every double that is appropriate - the…

Can you explain what is bad about "cold starts after long periods of inactivity"? Or provide a reference? It sounds interesting, but I do not know enough about how engines work to understand what would be different about starting a car after one day or one month of not driving it.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#69

Post by 0xffff2 »

jaclaz wrote: post #60
JshWright wrote: post #29

Earlier quoted context omitted.

> a 2.5 years (high mileage) old Corolla may still have some minimal residual value, let's say US$ 1,500. Even on the wholesale market, I'd wager it's several time that amount...

I don't know, but I would expect 7,500 to 10,000 miles per year on a normal car, hence that would have in a 130 weeks/2.5 years some 25 thousands miles top. If (as it is reported here and there) an Uber driver needs to make 3,000 miles per month, the car after 30 months would be more likely to be in the 90,000 - 100,000 range, i.e. the same as a 10-12 years car, i.e. an "end of life" car. Even if only 2.5 years old,…

>I don't know, but I would expect 7,500 to 10,000 miles per year on a normal car, hence that would have in a 130 weeks/2.5 years some 25 thousands miles top.

I think that's way low. Over the course of several years and car insurance companies, the lowest any of them would let me estimate my annual mileage was 10,000 miles/year.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#70

Post by aphextron »

beambot wrote: post #59
FTA wrote: post #30

Earlier quoted context omitted.

Yet another example of VC ending up subsidizing America. We could just cut out the middleperson and go to basic income paid for by VCs.

Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) For people who don't want to look it up... Some of the biggest are pension funds! It's not just high net worth individuals or companies, it's also mom & pop retirement funds. https://www.quora.com/Who-are-the-biggest-investors-limited-...

>Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs)

The Fed, with their policy of Quantitative Easing over the past 5 years.

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