Monday, January 26, 2015

Next January 2016, Uber is phasing out all 2005 and pre-vehicles

Uber set a timeline to phase out UberX vehicles pre-2005. These year limits are established to encourage a quality ride platform. What is Uber telling their Partners who refuse to finance a newer vehicle under special conditions? It is more like telling these drivers that you must make a newer vehicle purchase or you'll be waitlisted. UberX drivers may remain on the ride platform, but they will not be permitted to drive their outdated vehicle.

According to Uber, vehicles 2005 and earlier will get deactivated from the UberX platform this upcoming January 2016. An email went out last year to inform UberX drivers that 2004 and older vehicles would get deactivated from the ride platform in January 2015. 2005 vehicles are set to be phased out next January 2016.

One UberX driver who has given thousands of rides indicated he won't be purchasing a newer vehicle. Ridesharing takes a toll on vehicles, so buying a newer car will put major wear and tear on it. Reducing fares at all-time low prices doesn't make ridesharing as lucrative as before. In 3 years, this newer vehicle will have more than 200,000-300,000 miles on it. It will become scrap metal.

Numerous UberX drivers shared with their clients that driving on New Year's Eve was a major disappointment. No surges were activated in San Francisco until after 12:30am. When these surges activated, they drove through the high demand areas and got no rides. Clients have gotten smarter to wait until surges pass to request rides. They even order and cancel rides to avoid surge pricing.

Surge pricing made UberX a lucrative ride platform. Short rides at a 3X could make drivers decent money between 1am-3am. It is rare to see surge pricing in the East Bay. The best surges of 2015 occurred in the North Bay, which surge pricing reached a mind-boggling 8.1X. This 8.1X surge is unheard of, so accepting a ride with this high multiple could make a driver hundreds per ride.

Clients actually requested rides at these prices in Napa. You could see vehicles roaming around in downtown Napa, and then no Uber vehicles were available.

Sadly, UberX drivers can't make money on the UberX platform. They can't depend on the face value of rides, where the price of a fare is shown with star ratings after a trip has ended. Uber deducts a $1 safe ride fee, 20%+ commission, airport toll, and data usage of $10. The best way to view real earnings in real time is generate a current invoice to view earnings after deductions.

It is convenient that gas is at a historic low, otherwise, drivers would avoid driving. What driver would spend 50% of their earnings on gas to make chump change? Drivers are complaining that reduced earnings and hiring on too many drivers are making them second-guess ridesharing.

Uber hasn't offered any guaranteed earnings in a quite some time. They (Uber) made certain that reducing prices could in fact generate business. Drivers know this is a fragmented statement without merit. You can't make money giving rides at fractions of the original cost. Small $5 minimum rides only pay a driver $3.20 (deducting $1 and another 20%). In order to make decent earnings, UberX drivers must cover more ground and keep online far longer than usual.

Would you invest $20-$30K in a vehicle to become a full-time UberX driver? What if you drive high-risk clients who unfairly rate you? You are doomed. Get deactivated and you'll end up getting stuck with an expensive car you have no use for.

What we assume will happen is that if Uber enforces these vehicle year limits, many drivers will jump ship to Lyft and Sidecar. At least Lyft and Sidecar are more lenient with their car years and type. You can't drive a 2-door on UberX. However, Sidecar allows a 2-door vehicle.

Implementing car years on the UberX is sure to impact this ride platform. We know of one great UberX driver who uses a really nice luxury ride. He claimed he won't purchase a newer vehicle. Once next January comes around, he is done driving on the UberX platform. There is no reason to purchase another vehicle and risk reduced earnings with price reductions.

We'll see how the vehicle year requirements impact UberX. We expect, if this requirement is not lifted, that Lyft will grab a larger share of the ridesharing business. So will Sidecar.

UberX drivers are getting fed up with Uber promoting that prices are cheaper than taxis without taking into account the cost of operating as a ridesharing driver. Nevertheless, Uber is taking higher commission, keeping the $1 safe ride fee per trip and charging $10 weekly data charge. It is obvious that business is declining, there are rarely an good surges, poor cancellation policy allow no-show clients to take advantage, clients take too long, clients stack rides over the seat limit and use the rating system to convince drivers, leave garbage behind, vomit in rides at the expense of drivers losing valuable time cleaning this mess, and many other setbacks.

Now, tell us that Uber imposing vehicle year requirements to boost car sales is going to increase business? Make your own decision to purchase a vehicle or leave ridesharing, altogether. Because financing a newer vehicle and having this deducted from deposits may leave you with little money to afford the cost of living, as well as driving.

Make smart vehicle purchases. Don't allow a company to influence you into buying a newer car. There are alternatives to drive for another ridesharing platform.

*** Update: 2005 phase-out may be put on hold. Uber is currently accepting 2005 and after vehicles with 2016 drawing near. It is possible that 2005 vehicles may still be active on the Uber platform after the January 2016 deadline.