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September 5, 2016
www.usedcarnews.com
Ride-Sharing Programs Create New Class
UBER AND OUT: A man earns a little extra money using his car to transport others. But industry experts say it remains unclear what happens when that car re-enters the wholesale market.
By Ted Craig
Rush - Dated Material
What is an Uber car? That’s a question the industry will have to answer as ride-sharing services grow in popularity. A car driven by somebody contracting through a company like Uber or Lyft combines both the most and least sought after vehicles in the market. It’s a one-owner private car with the miles of a fleet vehicle. “It’s part of the gray zone Uber operates in,� said Tim Fleming, manager of residual and industry forecasting for Kelley Blue Book. Uber drivers use their own cars.
They are not employed by the company, but rather the company connects them with people looking for rides. However, Uber launched a lease program last year to provide vehicles for these drivers. It also works with several creditors to arrange vehicle financing, including subprime financing. Other than these vehicles, it’s hard to tell for sure if a car was used for hire other than guessing by the high miles put on in a short amount of time. “It’s going to be hard to separate these from any other highly driven vehicle,� Fleming said.
Jonathan Banks, executive automotive analyst for the NADA Used Car Guide, said these vehicles offer a great opportunity for used-car dealers, especially buy-here, payhere operators. Uber already benefits new-car dealers. Some claim they make more than 10 percent of their sales in some months to Uber drivers. There is very little data about how many new car sales these service are driving overall. “It’s increasing new-car business and that’s fantastic,� Banks said. There are some potential downsides to buying former Uber ve-
hicles. One is that in addition to high miles, the cars might have hard miles as the drivers used them in stop-and-go traffic. Another is passenger behavior, especially the risk of late-night riders becoming ill. This would make the cars more like taxis than either traditionally driven cars or even rental cars. Banks said he only expects the number of ride-share vehicles to grow in years to come unless regulators put the brakes on the services. General Motors Co. believes the future is bright for such services. It recently made a bid to increase its share of Lyft.
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