Even some of the most successful companies have to cut loose failing endeavors in some cases.
Uber, the ride-sharing giant that has impacted multiple aspects of the travel industry, has found one aspect of their organization continues to lose money. Now, they’re cutting it loose.
The company’s new CEO Dara Khosrowshahi is looking to improve company profits. One of the best ways to do this is by cutting out aspects of the business that have taken a plunge in the recent years. The organization’s auto-leasing subsidiary is the latest department to get the axe.
Xchange Leasing has been ended primarily due to its position as a capital-intensive part of the business. Uber has been experimenting in new sectors over the years, giving it more options to choose from and allowing the company to prioritize high-earning areas over lower-earning areas.
The move is one that could bode well for the organization, which has been known for ups and downs. Its non-traditional business model and willingness to compete with public-sector monopolies were the start of the tension, but a number of issues without the company have also resulted in investor skepticism and even public backlash in some cases.
The move comes as a result of Uber finding out the true impact of their loss-per-vehicle in the leasing sector. The company originally thought they were losing about $500 per car, only to discover the loss was 18 times what they believed. With losses at around $9,000 per car, ending the operation was an easy choice.
Uber has experimented with many different areas of business beyond providing an alternative to public transportation. They’ve become a top name in corporate travel, serving some major clients and providing them additional versatility in how they’re able to control travel for their own clients, customers, and employees.
Uber has also experimented with a move to the freight industry. Just as their app made it possible for people to get a taxi essentially by pressing a button, they aimed to create the same conveniences for people who needed a truck. Receivers looking for commercial operators to transport freight are experimenting with replacing the middleperson in the arrangement with Uber’s decentralized model, known simply as Uber Freight.
The commercial freight industry, like the cab industry, had certain objections to Uber’s model. But even as they faced the ire of long-established sectors of the economy, the bulk of Uber’s problems came from within.
Controversies regarding their work environment led to public ire and managerial shifts. The switching around of top administrators in the company wasn’t the only big change they’ve gone through. The company has also been denied its license renewal in London, a move that has been painted in different lights by different reports. Some claim the move was made to protect drivers and passengers, while others view the move as simply a step in protecting public monopolies.
Uber still remains a successful company, and their steps toward reducing wasteful areas of their business may help them bounce back from controversies and continue expanding into new markets.