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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.

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.
skybrian 9y ago
So apparently it's the passengers who benefited in the end? That is, if the drivers who put lots of miles on the cars didn't make much off it, this was an indirect way of subsidizing lower rates.
- URSpider94 9y ago
  Yup. Most of the story of ridesharing (and the sharing economy in general) is a massive shift of profit out of the hands of monopoly rentiers (cabbies (or more accurately, medallion owners), hotel owners) and into the pockets of consumers. We're all paying much less for car rides than we were a few years ago, but the basic underlying cost of providing those rides has not changed much at all.
  - brianwawok 9y ago
    All that crazy VC money benefits the users. Blue Apron is the same thing with food. I got free food, no plans to subscribe. Thanks for the meal! (Not literally me, I never used Blue Apron, but a lot of people have)
deleted 9y ago
[deleted]

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.

skybrian 9y ago

So apparently it's the passengers who benefited in the end? That is, if the drivers who put lots of miles on the cars didn't make much off it, this was an indirect way of subsidizing lower rates.

URSpider94 9y ago
Yup. Most of the story of ridesharing (and the sharing economy in general) is a massive shift of profit out of the hands of monopoly rentiers (cabbies (or more accurately, medallion owners), hotel owners) and into the pockets of consumers. We're all paying much less for car rides than we were a few years ago, but the basic underlying cost of providing those rides has not changed much at all.
- brianwawok 9y ago
  All that crazy VC money benefits the users. Blue Apron is the same thing with food. I got free food, no plans to subscribe. Thanks for the meal! (Not literally me, I never used Blue Apron, but a lot of people have)

deleted 9y ago

[deleted]