Uber Xchange Leasing
Uber's Xchange Leasing, which loaned vehicles to drivers who couldn't afford one due to poor or non-existent credit ratings, will be closed, the company has confirmed STR/AFP/Getty Images

Owing to heavy losses, Uber has decided to pull out of its car leasing business in the US – a move which could affect as many as 500 jobs, according to a report in the Wall Street Journal.

The two-year-old business, Xchange Leasing, loaned vehicles to drivers who couldn't afford one due to poor or non-existent credit ratings. However, it was reported last month that the program was costing Uber 18 times more per car than previously expected and the ride-hailing giant was considering to shut down the business.

Now, the move has been confirmed by a spokesperson of the ride-hailing company who told WSJ: "We have decided to stop operating Xchange Leasing and move towards a less capital-intensive approach".

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The leasing business, which has a fleet of around 40,000 cars and 14 showrooms across the US, employs some 500 full-time staffers – 3% of Uber's total workforce – who could be at the risk of losing their jobs with the move coming into effect.

However, it is still unclear whether Uber will shift these employees into other divisions, or move ahead with its first mass-layoff in eight years.

Among other things, sources familiar with the matter have told WSJ that Uber plans to honour the existing leases, but the closure of Xchange Leasing will not likely affect the ride-hailing vehicle-leasing business in Southeast Asia.

Uber started Xchange Leasing division in a bid to expand its pool of drivers and keeping fares and wait times low with more vehicles on the road. However, after two years of operation, it's managers brought to notice that the program was losing about $9,000 (£6,372) per leased vehicle rather than the $500 (£374) the company had expected. The numbers haven't been confirmed by the company.

The move by the ride-hailing giant comes as it works to curb the heavy losses it has incurred over the years. The company posted a total loss of $4.4bn (£3.29bn) in last six quarters but is narrowing them gradually. The firm posted a loss of $654mn (£489mn) in the second quarter of 2017, slightly lower than $708mn (£530mn) in the first quarter.