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Have you factored in the maintenance costs, oil changes, tires, wheel balance, windshield wipers, labors and other Xchange employee related costs? Those add up REAL QUICK.

BMW used to run an industry leading (back then) warranty program the covers the wear&tear of regular maintenance (except tires and a few others) but they eventually decided to discontinue that warranty program since 2015 due to the huge loss on it.

I thought it was a "plain" lease with maintenance (and tires, etc.) in charge of the user not a "full service" lease.

If it was the latter, then yes, but it would be "suicide", not even the "perfect world" example where the driver pays every month for the full period can possibly work.

EDIT: Found it, is just "basic maintenance":

https://help.uber.com/h/ba3a48f4-07ae-4836-9d5a-6df170210d6f

>- Oil change and tire rotation every 5,000 miles

>- Cabin air filter replacement every 25,000 miles

It doesn't add up to much anyway.

(as a side note the usual "US madness" about changing oil every 5,000 miles applies here as well).

I believe that when you buy a new Corolla, Toyota gives a 5,000 miles tire rotation and a 10,000 miles oil change included in first two years, BTW.

Taxi style use generally qualifies for shorter oil change intervals. Including that in the lease probably helps the vehicles stay maintained and resellable.

Naaah, that depends on quality of oil (and of course characteristics of the engine), as hinted it is a long standing dispute.

A number of people (particularly in the US, but not only) change their oil every 3-5,000 miles for reasons like:

- my father always changed oil every 3,000 (or 4,000 or 5,000) miles

- a friend of mine who races changes it every 2,500 miles so changing it every double that is appropriate

- the dealer (or the mechanic just around the corner) told me to change the oil every 5,000 miles or the engine will explode

Of course the Toyota engineers (mind you the same ones that designed, produced and tested for a few zillions miles the thingy that you chose to buy, implying that you trust them overall) saying 10,000 miles are a bunch of incompetent morons, what do they know?

http://toyota.custhelp.com/app/answers/detail/a_id/7604/rela...

Seriously, the 10,000 miles for (partially) syntethic oil is on the very low of the expected range of duration of a modern oil on a modern engine, i.e. it is a conservative enough duration, 12,000 to 15,000 is common.

And IF there is something that makes an oil or engine go bad is NOT "continued use" (like taxi use) but rather cold starts after long periods of inactivity (or racing, for other reasons).

In this the other also mostly psychological "limit" of "oil must be changed every six months no matter how many miles" has some more background reasons.

Still a (partially) synthetic oil is good for much more than that, usually 1 year at the very least.

Fully synthetic oils (very expensive) can last much more (but you need to change filters ever 10-15,000 miles anyway).

Taxi use is specifically called out as a special operating condition in the manual. The owner's warranty and maintenance guide for the 2017 corolla [1] says on page 38, for the 5,000 mile/6 month interval:

"Extensive idling and/or low speed driving for a long distance such as police, taxi or door-to-door delivery use: Replace engine oil and oil filter"

[1] https://www.toyota.com/t3Portal/document/omms-s/T-MMS-17Coro...

Good find, the resource I found earlier: http://toyota.custhelp.com/app/answers/detail/a_id/7604/~/wh... did mention "extensive idling" as "Special Condition" but did not mention "and/or low speed driving" and associate it with Police or taxi service.

Of course I take back what said before, always do what the Toyota engineers recommend.

> A number of people (particularly in the US, but not only) change their oil every 3-5,000 miles for reasons like:

There's an even bigger reason it worked like that for so long. Car companies (American car companies) would print in their US manuals that you should change the oil every 3-5,000 miles, while printing in their European manuals - for the exact same car - that the oil change should be every 10,000 miles. I believe this was brought up on Car Talk once, for example. And they even went into a discussion of how it wasn't a units conversion problem - that the kilometers listed in the EU manual were equal to 10,000 miles, not that someone had just switched the units accidentally, etc.

In Europe for most cars it's recommended to change oil after 10,000 kilometers, not miles. I know you're saying it's not a conversion problem - but maybe they just had an outdated manual or didn't see many manuals.

True, with one caveat: the engine manufacturer optimized for miles covered under warranty. Some even spec longer intervals between oil changes as a selling point.

Some engines are known to be more finicky to dirt (VW infamous chain tensioner comes to mind), and thus it makes sense, if you plan to keep the engine after the warranty expires, to reduce the oil change interval, as oil tends to be much cheaper than an engine rebuild.

There's a service where you'd send your spent oil to be analyzed for cleanliness, so you could determine the best change interval for your engine and usage. But that cost of that service wasn't much cheaper than just changing the oil a bit more often…

Can you explain what is bad about "cold starts after long periods of inactivity"? Or provide a reference? It sounds interesting, but I do not know enough about how engines work to understand what would be different about starting a car after one day or one month of not driving it.

In a nutshell?

It's complicated, but basically an oil has two main functions:

1) lubricate

2) circulate and take away all impurities and metal debris (which are then - as much as possible - filtered and absorbed by the filter and - at least the steel ones - by one or more magnets), i.e. to "clean" (continuously)

So the oil has many components inside, some of which with different weight (i.e. that may tend to separate) some of them that may be affected by water (the air that inevitably enters the engine can condensate) some by the oxigen in the air itself (i.e. oxidate).

Moreover some metal parts in the engine that are normally covered by a thin film of oil may well, after some longer period of inactivity "dry up" and thus develop some oxidation themselves or "run dry" thus creating more debris (that will be washed at next start and thus contaminate the oil).

And then there is the temperature cycles, an oil needs to be fluid enough when very cold yet do not become too fluid when heated, which adds the need of more components that may suffer from these cycles.

As an example in some industrial setups (think of static diesel electric generators) the oil in the engine is pre-heated electrically to keep it always from going under a given temperature.

All in all keeping it continuously mixed/moved and within a given temperature range is "better" for the oil.

The drivers bought the cars in open market and the dealers steered them to higher end cars, the article said. Pick the car in the middle of the range from http://toyotanews.pressroom.toyota.com/releases/2014+toyota+... the car costs about $19,000.

The finance cost is $871, https://goo.gl/YozEwy.

Administrative cost: Uber has 500 employees running the lease program (TFA said 500 would be laid off if it ended). 500 employees X $60,000/employee-year X 2.5 years = 75 millions, to run the lease program for 30 months. Uber has 40,000 cars in the program, so 75M/40000 = $1,875 per car for admin cost.

The car cost plus finance cost plus administrative cost: $19,000 + $871 + $1,875 = $21,746.

With the figure you have ($11,800) for the money Uber gets, the loss is $11,800 - $21,746=-$9,946. It is near $9,000.

>With the figure you have ($11,800) for the money Uber gets, the loss is $11,800 - $21,746=-$9,946. It is near $9,000. Good, but then almost every car was given back within the "shorter" term of six month.

And the 122 dollar per week might actually been higher for a higher initial amount.

With the new calculations (your higher cost but also the higher resell value JshWright suggested at the end) the full cycle would be (adding also the "basic maintenance" 20x100): 130x122=15,860+6,000+2000=23,860

The "normal" cycle is still short of US$ 2,114 per car, which means, that given that there are ONLY "full cycles" and "short cycles" 2014 Corolla's in the "fleet", that you need 7 "short cycles" every 1 "full cycle" to get a US$ 9,000 average.

7x9,946= 69,622

1x2,114= 2,114

69,622+2,114=71,136 / 8= 8,967

So if 7 out of 8 cars/financing went bad, then the theory that it is suicide to finance people with no or bad credit (or maybe that the income from Uber service had been grossly overestimated) seems like a valid one.

Resell value=

According to the article that is indeed the case because they almost targeted with people who had subprime/no credit.

And... Surprise! There was a reason they didn't have good credit ratings.

It's just like the housing bubble. Risky bets turn out to be risky. Putting a whole bunch of risky bets together doesn't reduce the risk, it just makes the problem bigger when it crashes.

In some ways this could be seen a very charitable on Uber's part. They're giving these people who don't have the personal assets a chance to work for a living despite their past behavior. If you're willing to concede that the company is willing to take risk to help the most disadvantaged people, then the only thing I can fault them on is doing it at the wrong end of the equation. They should have had the people make conventional leases at the higher rates and then tack on a "lease premium" on the fares they collect (supplied by Uber, not the passengers) to help pay for the car. This would prevent them from going to work for Lyft (where they wouldn't get the bonus money) but still gain the advantage of a steady job and hopefully get their credit back in order in time.

> a 2.5 years (high mileage) old Corolla may still have some minimal residual value, let's say US$ 1,500.

Even on the wholesale market, I'd wager it's several time that amount...

I don't know, but I would expect 7,500 to 10,000 miles per year on a normal car, hence that would have in a 130 weeks/2.5 years some 25 thousands miles top.

If (as it is reported here and there) an Uber driver needs to make 3,000 miles per month, the car after 30 months would be more likely to be in the 90,000 - 100,000 range, i.e. the same as a 10-12 years car, i.e. an "end of life" car.

Even if only 2.5 years old, upholstery, seats, plasric accessories, etc will likley show the wear from use.

Such a car can only be sold to "particular" customers.

But if the value is bigger, then it is another reason why the 9,000 US$ lost per car are simply too much.

A 2014 Corolla with 120k miles in "average" condition books at $5-7k "trade-in" value (which tends to map pretty well to wholesale value).

Good, then if we use the lower US$ 5,000 as a reference, the "complete cycle" turns to be actually advantageous for Xchange.

15,860+5,000=20,860 against a cost (adding the costs of "basic maintenance", assuming an intervention every 5,000 miles of 100 US$ each) of 16,500+20*100=18,500

That is 2,360 over 18,500 in 2.5 years, roughly 13% or 5%/year interest (excluding administrative/managing costs).

>I don't know, but I would expect 7,500 to 10,000 miles per year on a normal car, hence that would have in a 130 weeks/2.5 years some 25 thousands miles top.

I think that's way low. Over the course of several years and car insurance companies, the lowest any of them would let me estimate my annual mileage was 10,000 miles/year.

Yeah, I want to see you buy a 2.5 year old car on the open market for less than $3,000 even with high mileage.

I had to total out a 1997 Honda Civic due to a collision (which I got fixed, thanks), and the insurance reduced my payout by almost $2,000 because that's what they could get sight-unseen for a totalled car.

Yeah, I was more than a little pissed.

or lets assume you say f* uber drive for lyft or just say thanks for the free car a*shole.... then you need to run around and find them and collect the car and you got $250 for the hassle.

Hell, you might even find half your car's parts for sale on ebay.

Not that all people with bad credit are bad people but some of them are.

how do you dump that many high millage cars on the market without it dragging down used car prices.