Breaking News

Uber and Wesbank sign R200m car-renting dea


Driver-partners of internet ride-sharing service Uber will have easier access to cars following a R200m agreement with vehicle finance provider Wesbank and FirstRand’s enterprise development fund Vumela.
The companies announced on Tuesday in Johannesburg that they’ve struck up a partnership to offer Uber driver-partners the opportunity to rent cars from Wesbank as part of a three-year full maintenance lease programme.
Uber driver-partners will be offered these programmes based on their established earnings and quality record, said Uber and Wesbank. Driver-partners also need to have been with Uber for at least three months.
The aim of the partnership is also to help driver-partners establish their own passenger transport business and contribute to providing 15 000 work opportunities for Uber partners in South Africa over the next two years.
The agreement, though, does not involve offering car loans but rather an opportunity to build up a credit record. Driver-partners will then also have the opportunity at the end of the three-year period to buy the car at a value that takes into account depreciation.
“The (Uber) technology is really about empowering these entrepreneurs. But there was always a piece missing. It wasn’t always easy for Uber drivers to get finance,” said Alon Lits, the regional general manager for Uber in Sub-Saharan Africa, at a media briefing in Johannesburg.
“While it’s not ownership, they get all the benefits of ownership. It gives them something to aim towards,” Lits told Fin24 on the sidelines of the media briefing.
Chris de Kock, the chief executive officer of Wesbank, also commented on the deal at the media briefing.
South Africans have challenging credit records as out of every 100 applications for financing, 60 are declined, said de Kock.
But he said that Wesbank had created a new model that involves Uber subtracting income off of drivers’ fares to service the car rental agreement, tapping FirstRand’s enterprise development fund Vumela for security in case drivers can’t pay back amounts owed, and using a cents per kilometre model that determines how busy the drivers are and how much they need to pay each month to service the agreement.
“We own the car at all times. It’s not a traditional finance agreement at all,” said de Kock.
“We have worked very closely with Uber and we have developed a unique understanding of being a driver-partner within their network,” said de Kock.
“We have worked out what are the right affordability criteria. We have agreed with them (Uber) that they will subtract that income… and pay us that revenue before it goes to the driver,” said de Kock.
Meanwhile, Vumela has pledged R20m for the first 1 000 vehicles and is also expected to provide Wesbank with financial risk mitigation and support measures that will “enable the provision of the full maintenance lease option to Uber driver-partners”, according to a statement from the companies.
Uber added that the programme is “not limited to drivers with an existing record of income with Uber but open to all prospective professional transport providers as well”.
“Hertz, Europcar, Pace and Fleet Data Technologies have launched a short-term rental programme, negotiated by Uber, that gives drivers of metered taxis or other passenger transport vehicles the option of renting an accepted vehicle at improved rates,” said Uber in a statement.
“They can then use these vehicles, in partnership with Uber, until they have built an earnings and quality record needed to qualify for the full maintenance lease programme,” said the company.