Ride-hailing company Uber is selling its Xchange Leasing business to Fair, a digital car marketplace, in an effort to focus more on its core business.
Uber had a tough year in 2017 peppered with various scandals, lawsuits, disappointing financial results in some areas, and more. As the company tries to make its on-demand transportation service more profitable in the future, it's looking to shed peripheral units that haven't brought it much so far.
Uber Selling Xchange Leasing To Fair
Xchange Leasing is not part of Uber's core businesses or its big plans for the future, so the company has decided to sell all vehicles and the lease portfolio. Uber had founded Xchange Leasing back in 2015, aiming to lease vehicles to drivers who wanted to join Uber without bringing their own cars to the service.
Startup Fair has now agreed to acquire Xchange Leasing' active leasing portfolio, but the companies have not disclosed any financial terms for the deal. Xchange had a fleet of 30,000 cars, and recent reports pegged its value to roughly $400 million. However, it remains unclear how much Fair agreed to pay for the business.
Uber Will Keep Leasing Vehicles
Although it's selling Xchange Leasing to Fair, Uber will also continue leasing vehicles to drivers who can't bring their own car to the platform. As part of this deal, Fair will be Uber's exclusive partner for leasing in the United States, for drivers who need a vehicle for 30 days or more.
Fair's business that deals directly with consumers will keep going as it is, coexisting with the deal with Uber. When it comes to other potential partnerships with companies offering transportation-on-demand services rivaling Uber in the United States, Fair will stay out of it.
Scott Painter, who co-founded Fair and is the company's CEO, tells TechCrunch that for now, Uber is enough and it will not strike other such partnerships in the United States.
The series of scandals and troubles that rocked Uber in 2017 prompted Travis Kalanick to step down from his position as the company's CEO. The new Uber CEO, Dara Khosrowshahi, said that she would like to take the company public in 2019.
If Uber is indeed to go public next year, it would need to sort out its financials and boost profitability wherever it can, so getting rid of peripheral businesses such as Xchange Leasing makes sense. SoftBank also made a major investment in Uber recently, making the ride-hailing company notably richer.