Uber Technologies Inc. plans to wind down its US subprime car-leasing division to stem unsustainably high losses, according to people familiar with the matter, a major retreat just two years after starting the business.
The shutdown of the division, the Xchange Leasing program, comes just two years after its inception. As many as 500 jobs could be affected by the exit of the Xchange Leasing program, representing roughly 3%.
A person familiar with the matter told CNBC that Uber will shut down, sell to a partner or consolidate the business to make it more efficient. It's unclear if those type of leasing alliances will be affected by the change to Uber's Xchange division.
The problem? Being in the auto leasing business was harder than Uber imagined. Last year, losses at Uber totaled nearly $3 billion, excluding the China business, which it sold last summer.
Kalanick was forced to step down as Uber CEO in June in the wake of a long series of scandals at the company. While conceived as a way to help new drivers get started, the program also left some drivers shackled with commitments they were unable to meet, Bloomberg reported previous year. Uber is now being led by a committee of 14 executives.
Uber plans to discontinue its subprime car-leasing operation as it now exists, according to The Wall Street Journal.
Uber's board, which is acting in the absence of a chief executive officer, made a decision to close out the Xchange program before they had been briefed on the safety matter in Singapore, according to the person familiar with the discussions. All told, about 500 people work for the unit.