Uber Sells US Auto Leasing Business to Insurance Agency & PaaS Company

According to the WSJ, Uber is selling its US auto-leasing business Xchange Leasing to Fair.com, a mobile-first initiative that allows users to shop for cars using their mobile device. BTW, Fair is also a licensed insurance agent. Hold that thought.

Back in September, Uber has shut down its leasing subsidiary service that launched two years ago to directly lease vehicles to drivers on its ride-hailing network. “We have decided to stop operating Xchange Leasing and move towards a less capital-intensive approach” – an Uber spokesman said in an email to Fortune.

Now, it has a buyer – Fair.

The Santa Monica-based and BMW i Ventures-backed startup was established last year and rolled out last week in a limited release. Fair offers an end-to-end platform to allow users to shop for a car, get approved, set up payments and get a car. Here’s how it works:  (1) user downloads the app, (2) user snaps a photo of driver’s license for pre qualification purposes, (3) user chooses a monthly payment, (4) later, the app analyzes cars in the area and selects the ones with a fair price, (5) user chooses car, signs and picks up car.

Three things to note. One. Zero-Term. Users aren’t locked to a long term commitment and have the ability to trade up, try another car or return the car, as long as they make the all-in monthly payments. Two. Every car comes with a limited warranty, maintenance, and roadside assistance. Three. The startup partnered with Assurant to offer users the option to enroll in an insurance program through the app that would protect users and their Fair vehicle for as long as they have the car. Coverage can be added at the end of the car-shopping process, and premium is included in the car’s all-in monthly payment.

In an interview with CBT Automotive Network, Fair cofounder and President Georg Bauer said that Fair doesn’t own the inventory – it’s dealer inventory. “The moment the customer signs and purchases the car on the Fair App, we purchase the car from the dealer, wire the dealer the money, and the transaction is done.” 

Well, they do now. Xchange Leasing is a fleet of ~40,000 vehicles with an approximate net value of $400 million; a price Fair can afford; thanks in part to a $1 billion debt financing disclosed in October.

Bottom Line: an insurance agency and a platform company. Now, that’s an unfair advantage .

PS. Not to be confused with Helsinki-based Fair.