Ride-hailing company Uber is working on a deal to sell its U.S. auto-leasing business Xchange Leasing to startup digital car marketplace Fair, according to a person familiar with the matter.
Uber Technologies Inc said in September it was shutting down the auto-leasing business, which had heavy losses. Over the last few months Xchange Leasing has started to unwind the business, which was started to lease new cars to Uber drivers, selling cars at auction.
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The net book value of Xchange Leasing's more than 30,000 vehicles was roughly $400 million, according to The Wall Street Journal, which first reported the deal with Fair on Tuesday. The newspaper in August said that Uber was losing roughly $9,000 a car, 18 times more than previously believed.
As of August, Xchange Leasing had about 14 showrooms in the United States, Reuters previously reported. Fair and Uber both declined to comment on Tuesday.
Uber launched Xchange Leasing in 2015 in a bid to attract new drivers who could not otherwise afford a car because of spotty or poor credit. Xchange Leasing offered more flexible return and mileage limit policies than traditional car leases.
However, many Uber drivers complained of Xchange Leasing's predatory practices, saying that exorbitant rates forced them to drive full time just to cover the cost of the car, with little or no profit left over.
The Wall Street Journal reported that Fair will offer jobs to about 150 of the 500 or so employees at Xchange Leasing.
Fair, based in Southern California, founded in 2016, matches customers with cars based on what they are able to pay each month. Customers get approved and pay for their car through Fair, which owns the vehicle, and pick up the car at a dealership. They can keep the car as long as they want.
As part of the deal, expected to close early next year, Uber will offer potential drivers in the United States access to Fair to lease a car, the Journal reported.
Uber is eyeing an initial public offering in 2019, and is looking to pare its losses under the leadership of Chief Executive Dara Khosrowshahi, who took the job in August, and chief operating officer Barney Harford, who starts next month. Uber lost $1.46 billion in the third quarter this year, up from $1.06 billion in the previous quarter.