7 ms·

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 hilario

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.

tyingq 9y ago
Well, you have to give the car back (early) to trigger the loss. Or do you mean the driver somehow finding the car on the secondary market afterwards and buying it?
- brianwawok 9y ago
  No you could literally lease it from uber and work 20h a week at uber and 20h a week at lyft in it.
  - tyingq 9y ago
    Oh. The lease terms are crappy for the buyer as well. So, yes, funny in that Lyft would benefit in that scenario. The driver certainly doesn't though.
    - URSpider94 9y ago
      Actually, clearly the driver DOES benefit, if Uber is losing $9,000 per car. That's money that the lessee should have paid in an economically fair transaction. In all fairness, a bunch of people are paying a little too much, while a small minority are getting most of the benefit, e.g. people who default on their loan, or who drive the car into the ground in three months and then return it. But, that in a nutshell is why sub-prime leases are really expensive on the open, non-VC-subsidized market to begin with. The fact is, the vehicle portion of a hack business is a non-negligible portion of the cost. Most professional drivers replace their car every 2-3 years, after driving the old one to near-zero value by putting 150k+ miles on it. UberX's pricing is pretty much predicated on the fact that people aren't sophisticated enough to amortize their vehicle cost into their profit calculation. Works fine, until you kill your first car and it's time to buy a new one to keep driving ...
      - tyingq 9y ago
        >Actually, clearly the driver DOES benefit, if Uber is losing $9,000 per car. The drivers that exit the lease early benefit in that they are able to without huge penalty. They didn't net much out of the whole relationship though. How much do they make a day after subtracting $17/day just for the vehicle, plus whatever fuel costs are, self employment tax, commercial insurance, etc? For drivers that keep the car for a long time, the subprime terms eat into an already paltry income. That was the portion of drivers I meant weren't benefiting.
        URSpider94 9y ago
        I agree that the entire enterprise might be a bad deal for buyers, BUT: - for those who returned the car after months, this is an option that just isn't available in an ordinary lease - in some cases, death is not enough to cancel a lease. These folks would have been left making all of the payments on the car for the rest of the term. Plus, ordinary leases have very low mileage caps. They may not have made much money, but they would have lost thousands if they had a conventional lease. - for those who keep the car say 3 years and put on 200k miles: they would pay a total of $18k and return the car with a couple thousand dollars of value. If the purchase price was say $22k, then they got a completely fair deal. That's the thing - I don't think the terms were sub-prime at all, they were simply priced to only appeal to serious professional drivers working 50-60 hours and 1500 miles per week, which is not atypical for cabbies and limo drivers (mileage might even be low).
        tyingq 9y ago
        Ahh, I see why we aren't on the same page. My reading was that the cars leased in this program were used cars, with values substantially less than $22k. https://www.uber.com/drive/vehicle-solutions/leasing/ https://www.uber.com/drive/vehicle-solutions/leasing/ "The majority of eligible vehicles will be pre-leased and/or pre-owned inventory"
        URSpider94 9y ago
        Given Uber's pretty tight standards for cars, I would assume that these are late-model low-mileage pre-owned cars, which still hover i the $20k value range. I think they also wanted to reserve the right to re-lease cars that came back as early returns under the leasing plan.
  - Steeeve 9y ago
    No, you can't. You can lease it from uber and drive 40h/week for uber and 60h/week from Lyft, but even that is a stretch. When you lease from a ridesharing company you are committing to that ridesharing company.
    - sqeaky 9y ago
      I am not saying that isn't the case, but the article made mo such indication. What is your source for this?
- URSpider94 9y ago
  Technically, Uber has the loss even before the car is returned, since the asset value has already declined. Businesses are supposed to report losses and profits when they occur, not when cash changed hands. Companies are supposed to "mark to market" assets that are on the books at an inflated rate. But, most companies resist doing this until an auditor or government agency forces them to do it. This was the crux of the financial meltdown, banks were reporting mortgages on their balance sheets that were effectively worthless, given risk of non-repayment and depreciation of the collateral, as full-value assets. Thus, they were not seen as being insolvent.
  - wjnc 9y ago
    That's the general accounting principle, but accounting is pretty hard. Leases get pretty complicated quicky. For example in a sale and leaseback under IAS17 even 'profits' you make at the outset (let's call them economic profits), you are only allowed to recognize proportionally to the time of the contrary. Here the precautionary nature beats the realisation principle. Here's an example of how accounting is hard with differences between US GAAP and IFRS [1]. Uber loses half it's revenue under a new US GAAP principle... [1] https://www.ft.com/content/74447ca2-6b0b-11e7-bfeb-33fe0c5b7eaa https://www.ft.com/content/74447ca2-6b0b-11e7-bfeb-33fe0c5b7...
revelation 9y ago
It's the sharing economy.
FTA 9y ago
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.
- raverbashing 9y ago
  Somebody needs to pay for the next Uber of Avocado Delivery
  - glogla 9y ago
    I'm sure you actually meant Avocado Toast.
    - pplante 9y ago
      No the delivery company is an infrastructure play while the toast company is scaling the b2c interfaces.
      - toomuchtodo 9y ago
        Its "Not Hotdog" all the way down.
- fny 9y ago
  And we could promise the VCs 100x returns in the afterlife.
- beambot 9y ago
  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-partners-in-US-venture-capital https://www.quora.com/Who-are-the-biggest-investors-limited-...
  - avs733 9y ago
dec0dedab0de 9y ago
one year ago today I had to take a long uber ride, and the driver was excited that it was enough to cover his lease, and he could switch back to Lyft.

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.

tyingq 9y ago

Well, you have to give the car back (early) to trigger the loss. Or do you mean the driver somehow finding the car on the secondary market afterwards and buying it?

brianwawok 9y ago
No you could literally lease it from uber and work 20h a week at uber and 20h a week at lyft in it.
- tyingq 9y ago
  Oh. The lease terms are crappy for the buyer as well. So, yes, funny in that Lyft would benefit in that scenario. The driver certainly doesn't though.
  - URSpider94 9y ago
    Actually, clearly the driver DOES benefit, if Uber is losing $9,000 per car. That's money that the lessee should have paid in an economically fair transaction. In all fairness, a bunch of people are paying a little too much, while a small minority are getting most of the benefit, e.g. people who default on their loan, or who drive the car into the ground in three months and then return it. But, that in a nutshell is why sub-prime leases are really expensive on the open, non-VC-subsidized market to begin with. The fact is, the vehicle portion of a hack business is a non-negligible portion of the cost. Most professional drivers replace their car every 2-3 years, after driving the old one to near-zero value by putting 150k+ miles on it. UberX's pricing is pretty much predicated on the fact that people aren't sophisticated enough to amortize their vehicle cost into their profit calculation. Works fine, until you kill your first car and it's time to buy a new one to keep driving ...
    - tyingq 9y ago
      >Actually, clearly the driver DOES benefit, if Uber is losing $9,000 per car. The drivers that exit the lease early benefit in that they are able to without huge penalty. They didn't net much out of the whole relationship though. How much do they make a day after subtracting $17/day just for the vehicle, plus whatever fuel costs are, self employment tax, commercial insurance, etc? For drivers that keep the car for a long time, the subprime terms eat into an already paltry income. That was the portion of drivers I meant weren't benefiting.
      - URSpider94 9y ago
        I agree that the entire enterprise might be a bad deal for buyers, BUT: - for those who returned the car after months, this is an option that just isn't available in an ordinary lease - in some cases, death is not enough to cancel a lease. These folks would have been left making all of the payments on the car for the rest of the term. Plus, ordinary leases have very low mileage caps. They may not have made much money, but they would have lost thousands if they had a conventional lease. - for those who keep the car say 3 years and put on 200k miles: they would pay a total of $18k and return the car with a couple thousand dollars of value. If the purchase price was say $22k, then they got a completely fair deal. That's the thing - I don't think the terms were sub-prime at all, they were simply priced to only appeal to serious professional drivers working 50-60 hours and 1500 miles per week, which is not atypical for cabbies and limo drivers (mileage might even be low).
        tyingq 9y ago
        Ahh, I see why we aren't on the same page. My reading was that the cars leased in this program were used cars, with values substantially less than $22k. https://www.uber.com/drive/vehicle-solutions/leasing/ https://www.uber.com/drive/vehicle-solutions/leasing/ "The majority of eligible vehicles will be pre-leased and/or pre-owned inventory"
        URSpider94 9y ago
        Given Uber's pretty tight standards for cars, I would assume that these are late-model low-mileage pre-owned cars, which still hover i the $20k value range. I think they also wanted to reserve the right to re-lease cars that came back as early returns under the leasing plan.
- Steeeve 9y ago
  No, you can't. You can lease it from uber and drive 40h/week for uber and 60h/week from Lyft, but even that is a stretch. When you lease from a ridesharing company you are committing to that ridesharing company.
  - sqeaky 9y ago
    I am not saying that isn't the case, but the article made mo such indication. What is your source for this?
URSpider94 9y ago
Technically, Uber has the loss even before the car is returned, since the asset value has already declined. Businesses are supposed to report losses and profits when they occur, not when cash changed hands. Companies are supposed to "mark to market" assets that are on the books at an inflated rate. But, most companies resist doing this until an auditor or government agency forces them to do it. This was the crux of the financial meltdown, banks were reporting mortgages on their balance sheets that were effectively worthless, given risk of non-repayment and depreciation of the collateral, as full-value assets. Thus, they were not seen as being insolvent.
- wjnc 9y ago
  That's the general accounting principle, but accounting is pretty hard. Leases get pretty complicated quicky. For example in a sale and leaseback under IAS17 even 'profits' you make at the outset (let's call them economic profits), you are only allowed to recognize proportionally to the time of the contrary. Here the precautionary nature beats the realisation principle. Here's an example of how accounting is hard with differences between US GAAP and IFRS [1]. Uber loses half it's revenue under a new US GAAP principle... [1] https://www.ft.com/content/74447ca2-6b0b-11e7-bfeb-33fe0c5b7eaa https://www.ft.com/content/74447ca2-6b0b-11e7-bfeb-33fe0c5b7...

revelation 9y ago

It's the sharing economy.

FTA 9y ago

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.

raverbashing 9y ago
Somebody needs to pay for the next Uber of Avocado Delivery
- glogla 9y ago
  I'm sure you actually meant Avocado Toast.
  - pplante 9y ago
    No the delivery company is an infrastructure play while the toast company is scaling the b2c interfaces.
    - toomuchtodo 9y ago
      Its "Not Hotdog" all the way down.
fny 9y ago
And we could promise the VCs 100x returns in the afterlife.
beambot 9y ago
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-partners-in-US-venture-capital https://www.quora.com/Who-are-the-biggest-investors-limited-...
- avs733 9y ago

dec0dedab0de 9y ago

one year ago today I had to take a long uber ride, and the driver was excited that it was enough to cover his lease, and he could switch back to Lyft.