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>"The Xchange Leasing division had been estimating modest losses of around $500 per auto on average, these people said. But managers recently informed Uber exec
by bogomipz 9y ago
>"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:
>To fund these leases, Uber obtained a credit facility of $1 billion last year from a consortium of banks including Goldman Sachs, J.P. Morgan Chase, Citigroup, and Morgan Stanley."
I think this is what happens when its all funny money. Uber loses hundreds of million of dollars a quarter and yet big banks have no problem writing them a check for another billion. I'm guessing none of the banks asked what the credit facility was for or even any details about the leasing plan it was intended to fund?
- whatok 9y ago> I think this is what happens when its all funny money. Uber loses hundreds of million of dollars a quarter and yet big banks have no problem writing them a check for another billion. I'm guessing none of the banks asked what the credit facility was for or even any details about the leasing plan it was intended to fund? Details were disclosed in this article. I'd imagine the banks underwriting the loan had those details and more at the time. https://www.cnbc.com/2016/06/07/uber-wants-to-disrupt-the-auto-leasing-industry.html https://www.cnbc.com/2016/06/07/uber-wants-to-disrupt-the-au...
- bogomipz 9y agoThat certainly would be par for the course. There's been much speculation that auto leasing might be a bubble. See: http://www.zerohedge.com/news/2017-03-29/signs-auto-bubble-soaring-delinquencies-these-266-subprime-abs-deals-cant-be-good http://www.zerohedge.com/news/2017-03-29/signs-auto-bubble-s... and http://usa.streetsblog.org/2017/05/01/what-comes-after-the-auto-bubble/ http://usa.streetsblog.org/2017/05/01/what-comes-after-the-a...
- Spooky23 9y agoTotally. Auto financing is really scary. One of my dopey co-workers bought a BMW 5-series with an 84 month loan at 2%. $600/mo for 7 years for a car that will be upside down from day one.
- Neliquat 9y agoWhy they would loan longer than the warranty always puzzled me. There is a chance it may be not worth repairing by then.
- aetherson 9y agoIn 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.
- bogomipz 9y agoSorry 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.