Uber Drivers Forum banner
21 - 40 of 112 Posts
They have yet to turn a profit in 6 years of service and have blown through $16 billion+ in investor cash and have had to take on a $2.5 billion dollar loan and are constantly blowing through money while having to give up on money losing China where they allegedly lost $2 billion. They have no vision to profitability and the CEO hasn't shown any propensity to bringing people on board to constantly revamp the app in a useful and more efficient manner. They completely resigned the logo to the second worst logo in recorded history(second to Lyft's pink mustache).

I can't really see this money losing company, as it stands now, being anywhere worth more than $10 billion.
 
Few things to take into account.

Where else can you get a vehicle with $250 cash?
500 credit score is okay. Unlimited miles, oil changes every 5k miles & the ability to turn it back in within 2 months. Leasing a car for the full 3 years is a terrible plan. Assuming one doesn't continue to be terrible with finances, it's a life saver. That's why it's worth $800 a month for a brand new prius.

Secondly, cars depreciate much faster with time, mileage is a distant second & much more variable. An extra 100k miles on a Camry or Accord won't devalue like a BMW/Audi/merc/ford/all other shitty makes. Those online calculators are usually by dingbats who have never worked in the used car market.
 
Just to mess with your math.
Let's say you buy a car for 20k brand new. Drive it 75k miles a year. Every 150k miles, you replace the engine & transmission for $5k. 6 years later, the car has 450k miles, you've put in $35k in it. Add another $10k replacing wear items like shocks, brakes, tires, oil {learn to do these yourself} If the car gets 30 mpg @ $2 a gallon gas, that's $30k in fuel. Insurance runs about $1- 1.5k a yr. So $85k for 450k miles. That's less than $0.20 per mile. You get to deduct $243k in taxes over those 6 years. And guess what, that car will still be worth at least 4k when you sell {privately}.
 
Three things you need to do that cost basically nothing but will allow your car to go for practically ever. Oil changes, transmission fluid drain and fills every other oil change, and never let your car overheat so basically every 150k, replace all hoses and sensors in the cooling system. The parts are like $200 or so and you always use OEM cooling system parts. You always want your transmission fluid to be red, as soon as it starts to get dark you do a drain and fill, then drive it a few miles and check the dipstick. If it's still dark you drain and fill again. When the fluid gets dark the ****** overheats and the bearings inside and the clutch packs hate heat. When the fluid isn't protecting all the tight clearances wear the ****** exponentially because as metal heats up it expands. Most newer trannys now have an external filter that costs about $20 and you replace that every 150k.

Then basically do your timing belts regularly and most cars have chains now so they aren't needed to be replaced.
 
Three things you need to do that cost basically nothing but will allow your car to go for practically ever. Oil changes, transmission fluid drain and fills every other oil change, and never let your car overheat so basically every 150k, replace all hoses and sensors in the cooling system. The parts are like $200 or so and you always use OEM cooling system parts. You always want your transmission fluid to be red, as soon as it starts to get dark you do a drain and fill, then drive it a few miles and check the dipstick. If it's still dark you drain and fill again. When the fluid gets dark the ****** overheats and the bearings inside and the clutch packs hate heat. When the fluid isn't protecting all the tight clearances wear the ****** exponentially because as metal heats up it expands. Most newer trannys now have an external filter that costs about $20 and you replace that every 150k.

Then basically do your timing belts regularly and most cars have chains now so they aren't needed to be replaced.
SO WHAT CAN YOU DO TO NOT PUT SO MANY MILES ON YOUR CAR? GUESS YOU DIDN'T THINK ABOUT THAT ONE.
 
Uber repos are devoid of value.
Going forward, this factoid is going to make lenders balk at the Uber car loan.
Uber was new a few years ago, everyone thought it wasn't a taxi.
It is. Try and get a car loan for a taxi- unless you have medallion equity, it ain't happening.
Car lenders will go the same way once they realize the car maintains no equity as a repo once it leaves the lot.
So true...about the taxi loan. We (our cab company) started our own credit union for that reason. We can borrow at 3%. The driver can keep the car at its end of cab service, if he/she chooses. We can also sell it and pocket the money if we like.

Uber....

For the underemployed, unemployable, and unemployed. That's the target audience for Uber.
 
I came to Uber with a car loan already existing. I didn't start to replace lost income, I did so in order to earn some extra. My initial goal was $350 per week, 3 weeks out of 4, to cover the car loan itself, insurance, and some extra to cover the increased tax.

What I got, six months later, was a fully paid off car with money earned after expenses and still setting aside some for taxes. Income has been way above expectation. To the tune of $1k/week after expenses, still in the 3 out of 4 (generally) weeks worked.

All the doom and gloom rants are endless, and boring. Yes, some markets suck for driving for Uber. Because as a whole, those markets suck for everything. Those markets mean that blanket statement "Uber is great (everywhere)!" are wrong, but likewise other markets make the blanket statement that Uber sucks just as invalid.

As a whole, most whiners just look at the fare income itself, and totally ignore the bonuses. Compensation is the about the full compensation, everything you're being paid, not just the per mile charge.

As for all these "predatory" service Uber has to get you in a car: XChange is a positive net program for anybody driving 1000 miles a week, as compared to driving your own car. The Uber Hertz rental program is even better (although the Lyft one is worse, with per mile charges for offline time) to the point that anybody in areas where it is offered who isn't using the program is costing themselves money. Sadly, it's not offered here (yet)

You want to see predatory loan offers, just go through all the "We see you just paid off your car, here buy a new one! We'll give you a new loan!" mail I get every single week.
 
Discussion starter · #30 ·
Did you actually interview drivers? You as many are mistaken on the depreciation concept and why would a reasonable person do this, because it is a benefit. Not to side track your post, but I can explain it to you one on one. Just message me and we can go over it.
I think that you should explain your personal understanding of the concept of depreciation when it comes to automobiles here so that it can benefit all readers.
 
You can easily get an inexpensive vehicle for Uber. Financing is absolutely NOT an essential part of driving.

I bought a $6000 2006 van in June for the family, and I also use it for Uber on the side. I paid for it with a trade-in (which was bought with cash in 2009) and $2000 cash. The van had less than 70k miles on it at the time of purchase.

It is more than sufficient for the job.
 
There will always be people with life circumstances that will work for Uber for $8/hr to $10/hr. Reference pizza delivery drivers. They not only put a lot of wear and tear on their cars, but in most places they have to take orders, do a lot of manual labor at the pizza shop, help break down and clean at the end of the night and obviously deliver pizzas. On slower nights they might only have a few runs and make only $15 to $20 in tips on top of their small base pay.

But you don't see a shortage of drivers. Uber is pizza delivery without any of the work; no going into a store, no manual labor, etc...

Also, everyone doesn't need to pay a lot of bills. There are many people who think $400 a week....full-time is just wonderful. They don't have 3 kids and a mortgage. They might rent an apartment with 4 other people and their share of rent is $250 a month.

Because of this, there's always going to be more than enough drivers for Uber. And on top of that, if you're a low skilled worker, take your pick:

A) Walmart at $9/hr = $360 a week.
B) Uber full time making "anything" = don't have to work at Walmart.
 
I understand you don't like Uber, but you have very little understanding....actually zero understanding of what a Ponzi scheme is.
Uber won't be a real Ponzi scheme until they IPO.

Right now they're just a scam.
 
  • Like
Reactions: TwoFiddyMile
Uber & the Auto Loan Bubble - An Analysis - August 2016

I live in Washington, DC, and increasingly I notice on-demand taxi logos (Uber, Lyft) on vehicles. This is not surprising, considering the recent successes of these platforms, particularly Uber, and the fact that I live in a large market for them. But, sometimes, and more than I would think, these Uber-tagged cars I see are nice, new cars, sometimes ones I know cost twice as much as I paid for mine.

And I think to myself, "I have a 2011 Honda CRV that has low miles and is in good shape. It is my most valuable, non-retirement, tangible asset, since we rent our house. But a car is a poor investment: it depreciates just sitting on the street, driven or not. And the last thing I would do is subject it to the rigors of additional driving and depreciating abuse on Washington's pothole-riddled streets as an on-demand taxi driver, to make a little more money.

And this leads me to this question:

Why would a rational person take out a loan on an expensive, depreciating asset-a poor investment to begin with-then subject that asset to the road abuse of driving it as a taxi in urban/peri-urban environments, for arguably poor pay and no real benefits as an Uber driver? How has Uber gotten people to make this decision-significantly discounting the future value of their automobile to make money right now-en masse?

I argue that Uber's success tells a story larger than the achievements of some of the brightest people in the tech industry, which in 2016 means the smartest people on the planet, or so we should all believe. Alternatively, the reasons for Uber's success tell the story of post-financial crisis America: a large and growing pool of people completely out of the workforce (or under/unemployed) saddled with debt that they have been either targeted to take on (in this case auto loans) or have done so out of necessity in order to amble forward.

This is not a critique of Uber as a company; it has simply taken advantage of these conditions. It has acted as businesses should in a capitalist economy, albeit during a shaky, uneven, and crises-prone economic recovery.

Rather, Uber has relied on poor labor market conditions and an auto loan bubble to achieve its initial takeoff and growth, and as I will explain, it is now relying on more aggressive measures to maintain and ensure future growth.

How did it get here?

Since Uber's founding in March 2009, many explanations of its rapid success tend to focus on the app/platform, the company's corporate culture, or the culture of Silicon Valley as the primary reasons for its successes and current $68bn pre-IPO valuation, seen in the graph below:

Image

But, often critiques and analyses of Uber do not take full stock of the macroeconomic conditions that existed during its takeoff and subsequent, rapid success-conditions that may explain more than, say, a critique of the effectiveness of Uber's CEO, Travis Kalanick.

The only real study with any sort of methodological rigor is a 2015 Hall and Krueger article, "An Analysis of the Labor Market for Uber's Driver-Partners in the United States", based on internal Uber data released to the two economists and sanctioned by the company. It is the only official, numbers-based snapshot of the company's growth, although the 'study' is barely more than a thinly disguised puff piece.

The paper comes off as rather defensive, attempting to explain away Uber's treatment of drivers as contractors instead of employees, its lack of benefits, and instead praises the flexibility that Uber offers people to determine when they will heap additional abuse on an already depreciating asset. The study also relies on data from another Uber-approved 'study', which is rather methodologically suspect, which I address at the end of the article

Still, the following two graphs from the Hall and Krueger piece are some of the most telling regarding the rapid success and growth of Uber, and again they are based on official Uber data. The trend(s) from the graphs is pretty clear: few drivers in 2012, but over 150,000 about two and-a-half years later.

Image

And, from the same study, Uber's driver growth by month:

Image

However, all of this rapid growth and expansion has taken place when interest rates have been rock bottom, since the mortgage-fueled financial crisis of 2007/8, in attempt to keep credit flowing to businesses and consumers.

Image


In fact, Uber has never existed as a company outside of recent and current loose monetary policy, especially low interest rates. These too have ticked up slightly since the end of 2015 by about a quarter of a point. These rates affect the interest charged on all loans, and while the impact, across the board, is rather lagged, additional rate increases will especially affect subprime borrowers (auto loans, mortgages, everything), and could "cripple" new auto sales.

Combined with a robust quantitative easing program by the Federal Reserve, the country (and emerging markets) have been awash in cheap, dollar denominated credit. This credit had to go somewhere, and, in the Unites States, one place it has found a home is in automobile financing, up from $0.82tn in 2006, to $1.07tn in March 2016, or "nearly 30% from the post-crisis bottom, and nearly 20% from their prior peak". This has created a loan and asset bubble in automobiles, which, in this country, have the tendency to eventually pop, sometimes disastrously for borrowers.

Here you can see the recovery, and increase, of total auto sales; they have already surpassed pre-financial crisis numbers, of around 17m a month, to the most recent trend of closer to 18m a month (I look at a few other measures of auto loan debt later in the article). Total auto sales were steadily climbing throughout Uber's existence as a company (9.8m in March 2009, almost a Great Recession low, to 17.8m in May 2016):

Image


Throughout this bubble, a lot of people have been able to finance cars that they probably cannot afford. This has been a good thing for Uber: it needs a lot of people willing to finance new, or newish cars, and be willing to put them on the road as drivers. But it needs more than just lots of nice cars financed by an ocean of debt: it also needs someone to drive them.

The second recent macroeconomic condition Uber needed was a poor labor market, or a large labor pool to tap-on-demand-that is either unemployed, under employed, or who have dropped out of the labor force entirely. This analysis does not use standard unemployment rates, because I do not think that this top-level number tells the entire story of the US labor market as well as the labor force participation rate.

As a 2014 Bloomberg article argues, "People are attracted to on-demand gigs because more solid full-time work is still hard to come by in a U.S. economy that has rebounded for everyone but average workers." When Uber started in 2009, it had a large, desperate pool of workers to draw on, a trend that in general has not changed significantly. But, if this does change-if regular people can go back to getting regular, full-time employment-what does it mean for Uber?

This is a snapshot of the labor force participation rate in the US, since the year 2000. There is a noticeable downward trend in the number, and almost a full three percentage point drop in this rate between Uber's 2009 founding-65.6%--and the most recent numbers available, 62.7%. However, people re-entering the labor force (or for some young people, entering for the first time) might not be good for Uber:

Image

The same 2014 Bloomberg article shrewdly concludes that: "Rather, on-demand has thrived, in part, because the nation has dropped a bedraggled and optionless workforce in its lap -- and on-demand's success depends in part on the idea that our nation won't change." But in 2016, that appears to be changing in a very recent upward trend in this top-level number, improving or at least remaining steady five out of the six months of 2016 the data are available for (touching in March 63.0% for the first time in over two years).
Let them eat car payments.
 
One observation that I would make, something that I did not see addressed in your report, is the fact that Uber was initially profitable enough for the driver to warrant an expensive lease. I started with Uber a few years ago (and have since quit). My first year I netted almost 50k. After the rate cuts of last year my income was cut in half and I had to start working other jobs to maintain my expenses. So I would add that Uber used deceptive advertising and unethical business practices to artificially accelerate growth. And it may not be completely relevant to the theme of your research, but there was a huge drop in driver earnings starting in the middle of 2015.
 
21 - 40 of 112 Posts