# Uber & the Auto Loan Bubble - An Analysis



## hounddogman (Aug 23, 2016)

This is a piece of research I have been working on since a friend of mine became an on-demand driver. This has not been posted or published anywhere else online.

*Synopsis: *I argue that Uber's success and growth depends primarily on:

Low labor force participation rate (large, desperate labor pool willing and ready to abuse their most valuable asset, a car, to work on demand for Uber)
Auto loan bubble (so enough 'new' vehicles that meet Uber's vehicle requirements are available for people desperate enough to depreciate them for low pay as drivers)
Constant source of new cars/drivers on the road, which the market is no longer providing as the auto loan market sours, resulting in a subprime-targeting leasing Toyota-Uber partnership (creating what I call Indentured Drivers)
I conclude that any change in the first two (improved labor market or a popping of the auto loan bubble, which both seem to be taking place) will greatly affect Uber's current $68bn pre-IPO valuation.

*EDIT: *When I originally posted this, I did not have forum permissions to include hyperlinked sources. I am working on getting them fixed. Until then, here's a link to the PDF: bit.ly/2c6QdrB - This copy contains all references and hyperlinks to sources.


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## hounddogman (Aug 23, 2016)

*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:











​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.









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









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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.










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):










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:









​
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).


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## hounddogman (Aug 23, 2016)

*Now back to the auto loan market.*

At a basic level, Uber needs _cars_ on the road, none of which it owns, or is responsible for upkeep or repairs. The fact that these cars, for the time being, must be driven by humans, whom Uber has to pay, is a temporary inconvenience for the company. But what kind of cars does Uber need on the road?

Uber has very specific vehicle requirements for the cars that it will allow potential drivers to use, which, depending if drivers choose either the UberX or XL program, vary by city. It claims that, at a minimum, cars must be manufactured no earlier than 2001, although a quick glance at the requirements by-city shows that 2005 looks to be about average, with 2011 the oldest model it will accept in its largest market, New York City.

That is, in order to drive for Uber, first a person must possess an automobile. But this car must also be relatively new, in good shape, and kept up to Uber's inspection standards.

Were it not for the current auto loan bubble in this country, Uber would not have had a ready pool of cars nice or new enough to meet its standards, that are accessible to economically desperate people willing to use these cars to serve as Uber drivers. But will the auto loan boom that Uber has relied on to get acceptable cars on the road last forever? As the data I present below show, this auto loan tide is already beginning to turn, and not in Uber's, or anyone's favor.

Here you can see total US Auto Loan Debt (going back to March 2000) skyrocketing, far surpassing its pre-financial crisis levels, about $0.82trillion in 2006, compared to $1.07tn in March 2016 (about a 30% increase), and performing a steady climb since Uber's March 2009 founding:









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Expressed as total number of accounts, this number has increased from 84.9m in March 2009, to 100.4m in March 2016, roughly an 18% increase:









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There is a noticeable trend in this graph (shown as loan totals): a steady increase in the number of delinquent loans (shown here as one day short of becoming non-performing): $3.8bn in March 2011, compared to $5.8bn in March 2016, almost a 52% increase:









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The same trend can be seen here, as a percentage of delinquent, but not non-performing loans from US banks, an increase from 1.37% in March 2011 to 1.47% in March 2016:









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And, again, the same trend can be seen in the visible uptick in the tail of this graph, showing loans delinquent by 90 days (non-performing). Here we see a fall in auto loan delinquencies from 5.09% in March 2009, to 3.34% in March 2015, but trending upward to 3.52% in March 2016:










​And again, in "seriously delinquent balances", which fell from a Recession high of $8.62B in September 2008 ($7.98B in March 2009, Uber's Founding), tumbling to a recent low of $2.87B in June 2012 of the recent upward trend, with delinquent balances back up and totaling $6.88B in March 2016:









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As it turns out, US banks are beginning to smell smoke, and tighten auto loan lending standards, shown through several measures, here as "US Net Percentage of Domestic Banks Reporting Tightening Policies on Auto Loans to Customers That Do Not Meet Credit Scoring Thresholds", an 8.0% increase from -3.20% in June 2011, to 4.80% in June 2016:









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And here as "US Net Percentage of Domestic Banks Reporting Increasing the Minimum Required Down Payment on Auto Loans", an 8.6% increase from -5.40% in March 2011, to 3.2% in June 2016:










​And here as "US Net Percentage of Domestic Banks Reporting Increasing the Minimum Required Credit Score for Auto Loans", a 10.1% increase from -8.50% in June 2011, to 1.60% in June 2016.









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Loan recoveries (writing off bad loans/debts, or, repossessing automobiles whose borrowers have gone into default) are also on the rise: a drop from $407.20m in March 2011, to a recent low of $271.46m in December 2012, back up to $360.92m in June 2015:









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So the auto loan trends that Uber has conveniently relied on are beginning to sour. If continuous growth is also necessary for its long term success (to wrench market share away from competitors and dominate the ride-sharing market), where will these new and additional drivers come from?

Uber creates them.

To maintain and continue to gain market share (to crowd out competitors such as Lyft and Via), and drive down fare prices for passengers, and thus grow the company's valuation, Uber needs to _constantly _put additional cars on the road. For the most part, the company has been able to conveniently rely on the auto loan bubble and poor labor market conditions in this country to make this happen.

Yet despite the current auto loan bubble, it was still not enough for Uber's growth goals, so they decided to go out and find their very own subprime borrowers.

As its CEO, Travis Kalanick proclaimed in a 2013 Bloomberg article, "The demand is there, but if we don't get the cars on the road -- if we don't help our partners and drivers get cars on the road -- then it just doesn't matter. We're just not going to be able to grow."

To get these cars on the road, Uber teamed up with Toyota. This partnership has resulted in a leasing program, so that Uber can now, as a company, directly target subprime borrowers who even during the post-financial crisis auto recovery and boom were unable to secure financing on a car that they could not afford. The leasing program, whereby non-creditworthy borrowers lease a Toyota car that they pay back by driving for Uber, is a very, very bad deal for the borrowers, both in weekly lease payments and buyout options.

In short, people leasing a car through this Toyota-Uber collaboration are being taken for a ride, so that they can take you for a [cheap] ride.

Numbers regarding this partnership with Toyota are not publicly available; neither are numbers that parse out the number of 'regular' Uber drivers vs. Uber's Indentured Drivers behind the wheel of a Toyota. Without these data, it's impossible to see how much Uber now relies on these Indentured Drivers, as opposed to conventional recruits using their own cars.

*Conclusion below...*


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## hounddogman (Aug 23, 2016)

*Conclusion*

I argued that Uber has enjoyed two necessary macroeconomic conditions in its initial success and subsequent growth: low labor force participation and an auto loan bubble, but that now it must hustle to drum up new, debt-laden drivers to insure a never ending supply of additional Uber drivers on the road.

As mentioned earlier, this is not a critical analysis of Uber as a company. My wife and I use both Uber and Lyft regularly. Ride-sharing has recently become our default mode of weekend inner-city travel since the DC-area Metrorail system is attempting to cram four decades of delayed maintenance into a few months, rendering the already frustrating transit system almost unusable. To an extent, Uber is filling the gap in public transit that the governments in the Washington Metropolitan Area Transit Authority-DC, Virginia, and Maryland-cannot provide.

Yet, instead of taking a sober look at the macroeconomic conditions that explain why Uber is successful, to-date, critiques focus on the competency of its staff, its disruptiveness, unique corporate culture, Silicon Valley-worship, or the flawless functionality of its app/platform (it is incredibly easy to use).

Aside from the Uber-sanctioned and approved 2015 Hall and Krueger study, the only other real study that exists is a Benenson Strategy Group (BSG) study conducted in December 2014, based on interviews with Uber drivers (Hall and Krueger use this poll data for much of their analysis). The BSG research resulted in a very snappy, slick looking publication, complete with well-designed, flashy graphics portraying only the benefits of driving for the company. That's fine. Why would Uber contract a study that made them look terrible?

But the methodology is based on 601 interviews. This is the kind of methodological rigor you could expect from an undergraduate in an 'Intro to Social Science Statistics' course, where they learn that, at a minimum, you must have an N, or sample size, of at least 600 for conventional statistical methods to tell you anything worth knowing. A cursory glance at one of the graphs in the 2015 Hall and Krueger paper on Uber show an estimated 150,000 active Uber drivers at the time of the BSG study. This is impressively terrible research for a large consulting firm that touts itself as "a top strategic research consultancy that advises many of the world's most successful corporations, heads of state, and institutions."

Shoddy research might be the least of Uber's worries.

The auto loan graphs I provided indicate that maybe Uber cannot count on the frothy auto loan market that was such a boon to the company during its initial takeoff. David Stockman's analysis of subprime auto loan delinquencies, and the auto loan bubble in the US, is insightful and something that I am sure Uber is very much aware of (emphasis added):

"Eventually, the soaring default rates&#8230;will infect the entire auto market--just as did the implosion of sub-prime mortgages last time around. When the volume of defaults and repossessions gets high enough, the used car market will falter, and the food chain of auto sales will fail."

I am sure Uber staff, drivers, and investors are all hoping that driverless cars become a legitimate alternative before the ticking auto loan bomb blows up in their faces, or at least before the IPO. Uber is now testing a small fleet of 'driverless' cars in Pittsburgh (although , for now, the prototypes are each overseen by 'safety driver' human co-pilots). The company's rush to get a viable driverless car on the road is usually seen through the lens of its competition with Google in the self-driving car niche, and not its desperation to beat the popping of the auto loan bubble that it has relied on to supply cars.

And, the same goes for labor market conditions, as there does appear to be a slight uptick in the most recent labor force participate rate numbers. As for the number of new Indentured Drivers Uber is onboarding from its partnership with Toyota, again those data are not public, and neither are current driver numbers outside of the Hall & Krueger data.

And who knows where the Uber-Toyota partnership will end up, once they have exhausted all remaining borrowers who were not credit worthy enough to get swept up in the post-recession auto loan bubble. I would imagine that the Uber staff who came up with the partnership idea, which requires a $250 down payment from the lessee, aren't too happy with the recent CFPB payday loan rules (payday loans hover around an average of $350 each), tightening payday lenders' predatory lending standards. Uber and payday lenders are essentially after the same financially-desperate borrowers.

Uber's success tells the greater story of the uneven, lopsided, recovery in the United States since the last recession. The business is a fantastic idea that has pounced on current market conditions to build a platform that has upended the taxi industry, and created a fabulously valuable company, by its current pre-IPO valuation.

But Uber was built on an ocean of easy-to-obtain auto loan debt taken on by an increasingly desperate workforce, two trends that, hopefully, will begin to change for the better. If its valuation is built on these macroeconomic trends-low labor force participation rates, an auto loan bubble, and its ability to target subprime borrowers to maintain and increase market share-a shift in any one of these might make the current $68bn valuation seem a bit inflated, or at least unstable.


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## hounddogman (Aug 23, 2016)

Here's a link to the PDF: bit.ly/2c6QdrB

This copy contains all references and hyperlinks to sources, which I could not post in the thread.


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## Atom guy (Jul 27, 2016)

It would be an interesting analysis to determine the percentage of Uber driver's that came to the platform with an existing auto loan (indicating perhaps a job loss that Uber income replaced) vs Uber drivers that financed/leased a car specifically for Uber (a terrible idea) vs Uber drivers that either owned their car outright already or bought a car for cash specifically for Uber.


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## hounddogman (Aug 23, 2016)

Atom guy said:


> It would be an interesting analysis to determine the percentage of Uber driver's that came to the platform with an existing auto loan (indicating perhaps a job loss that Uber income replaced) vs Uber drivers that financed/leased a car specifically for Uber (a terrible idea) vs Uber drivers that either owned their car outright already or bought a car for cash specifically for Uber.


Totally agree. Sadly, the best data out there, across the board, is the data contained in the charts from the Hall & Krueger study. I reverse engineered the graphs to pull out all of the data points. But, the financing data you're talking about just aren't available. And I agree, I would really like to take a look at those numbers.


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## Atom guy (Jul 27, 2016)

Where Uber seems to be faltering is in new rider acquisition. A steady lowering of rates nationwide can only be seen as an attempt to increase ridership, but has the negative effect of removing drivers with nicer vehicles or higher auto loan payment needs off the platform. This has created a cycle of slowly worsening Uber cars, which scares off higher end passengers, which forces Uber to lower rates to attract more price conscious riders, which scares off more drivers with nicer cars etc..


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## ABC123DEF (Jun 9, 2015)

Oober is Oober's own worst enemy. How many times can you shoot yourself in the foot until the foot completely falls off?


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## hounddogman (Aug 23, 2016)

That's a good point, atom guy.

What started all of this is seeing cars that I know cost twice as much as mine--and much newer--being flat out abused by their owners using the car to drive for Uber. Has Uber been able to make ALL of these people mentally devalue their cars to make money now--drastically discount its future value, or are people that desperate because they should not have bought the vehicle in the first place? 

I am starting to think it is the latter, that Uber was just been able to take advantage of the situation.


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## Trebor (Apr 22, 2015)

This is way too much reading.


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## rtaatl (Jul 3, 2014)

It's going to come down to how much these banks are going to take in defaults....it already has to be a lot. The automakers don't care what Uber doe because they're selling more cars. The dealer don't care for the same reason. So I take it the bubble is going to burst when the lenders say enough is enough....I'm sure the insurance will cave soon after. This circus can only last so long.


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## Disgusted Driver (Jan 9, 2015)

hounddogman Nice job!! I can't find fault with anything you have here or your analysis.

2 things I've noticed that might buck against your conclusion is what I think (and I have to be honest here, I don't know for sure since they guard this data) is their increasing reliance on part time drivers. They seem to be getting a large number of retired males (at least in my experience in my market) who just need something to occupy their time and make a little spending money. Cars tend to be paid up and well kept, they only drive during the day and probably only last 3-6 months. But there are a lot of these types of people so perhaps they can go a long time before churning through all of them. At night, you have a lot of younger folks who are looking for a little supplemental money like college students who drive late Friday and Sat. night, these people are happy to clear $10-12 an hour, it's easier for them than the retail jobs they currently have.

So these two demographics might soften the blow of the trends you mention. Uber might also relax their vehicle age restrictions if they see supply falling off. What I think w need to consider is that Uber's end game may well be to make cars a utility that you pay for every month like electricity. If they can get autonomous cars working in the next 10 or so years and get rid of the labor, they can probably make the service cheap enough and convenient enough to do away with personal ownership of cars. A big gamble on autonomous vehicles, sure. But if it pays off, they just need to keep things running with drivers long enough to get there.


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## hounddogman (Aug 23, 2016)

Thank you for your input, and for your compliment.

To your first point: data availability is the biggest issue here, at least on the Uber-side of the equation. Parsing everything out by city, age and make of vehicle, age of drivers, etc would definitely be very helpful. But, like I said in an earlier post, the best hard data out there are the points contained in the Hall & Krueger study, and while you can approximate their values using reverse-engineering software, all you're left with is a general positive number.

I could have crammed all of this through a regression model, but the linearity is pretty obvious, and I don't have the data to do any sort of forecasting.


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## Beur (Apr 14, 2015)

I have met several drivers who fell for the new car easy money gimmick. Many, after a few short months are already out of the game. 

I'm in a small market, we're a snowbird and vacation destination. Summer is particularly hard on drivers. During season it's easy to make $150 a night in a couple of hours, in the summer you're lucky to make $150 a week working every day. In essence those lease drivers are working at minimum of one week just to make the lease payment. $160 a week for a Nissan Sentra is ridiculous! Adding in Uber's gas card, which all those I know use, and it's a recipe for financial disaster. 

After the music festivals many quickly fell weeks behind on their payments, both gas and car. Mind you these payments are automatically taken from the driver, they were now all driving to keep their cars. Uber takes the gas payments first because that's their money, car payments either weren't happening or were very minimal. It's sad to say, but it only took a few months of this working to be able to drive for drivers to say ______ it and leave. 

Interesting thing I heard repeatedly is that it takes a long time for the lease partners to repo the vehicles, sometimes as long as 6 months, Google it. 

Now that these drivers were demoralized and beat down, many don't cut their loses and run they continue using the car for personal use. Many have said they're going to wait for the repo man to show up and in the meantime they're going to run the car into the ground. People suffering from financial hardships don't care about their credit, that hole they thought they were digging themselves out of just became a crater from which they can't see the light. 

The auto loan bubble will effectively cripple Uber, once the pool of lease drivers leave because they're not making the money dangled in front of them, or their cars are repo'd Uber is going to be back to a shortage of drivers.


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## bingybingyfoo (May 5, 2016)

This is great!
I definitely think there are always people who will always be vulnerable to desperation a/o poor financial literacy, and there are industries designed to take advantage of them, though it's an obvious business win to internally offer subprime financing to your captive market (see for-profit ed). I too have watched the UER especially, turn slowly against the tide on the gig economy, in general, and it will be interesting to watch that change, or maybe it's the old form labor market that's going to change.
Are you planning any type of further research yourself? Is anyone doing projects based on the impact on and experience of the drivers?


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## TwoFiddyMile (Mar 13, 2015)

rtaatl said:


> It's going to come down to how much these banks are going to take in defaults....it already has to be a lot. The automakers don't care what Uber doe because they're selling more cars. The dealer don't care for the same reason. So I take it the bubble is going to burst when the lenders say enough is enough....I'm sure the insurance will cav koe soon after. This circus can only last so long.


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.


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## drexl_s (May 20, 2016)

hounddogman said:


> This is a piece of research I have been working on since a friend of mine became an on-demand driver. This has not been posted or published anywhere else online.
> 
> *Synopsis: *I argue that Uber's success and growth depends primarily on:
> 
> ...


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.


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## I_Like_Spam (May 10, 2015)

hounddogman said:


> 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?


It isn't a rational act.

When I was driving Yellow Cab, the "new" taxis that were brought into service were retired police cruisers bought at auction with 150,000 miles on the odometer already, they painted them yellow and installed meters.

YC was a professional outfit, they didn't see the point in buying new vehicles for livery duty. For rank amateurs, who by definition have been Ubering for less than 3 years, to think they know better than the cab industry who worked the numbers for this kind of racket just isn't rational.


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## shiftydrake (Dec 12, 2015)

OP that is just way too much reading


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## uberdriverfornow (Jan 10, 2016)

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.


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## dirtylee (Sep 2, 2015)

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.


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## dirtylee (Sep 2, 2015)

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}.


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## uberdriverfornow (Jan 10, 2016)

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.


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## uber strike (Jan 10, 2016)

uberdriverfornow said:


> 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.


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## phillipzx3 (May 26, 2015)

TwoFiddyMile said:


> 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.


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## Euius (May 19, 2016)

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.


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## hounddogman (Aug 23, 2016)

Guess it's settled then, Euius. Your N=1 sample size is very convincing.


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## shiftydrake (Dec 12, 2015)

uber strike said:


> SO WHAT CAN YOU DO TO NOT PUT SO MANY MILES ON YOUR CAR? GUESS YOU DIDN'T THINK ABOUT THAT ONE.


Help I've fallen and can't reach the caps lock key..............and to answer your question...best way to avoid all the miles don't drive for Uber....period end of discussion


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## hounddogman (Aug 23, 2016)

drexl_s said:


> 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.


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## renbutler (Jul 25, 2015)

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.


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## Taxi Driver in Arizona (Mar 18, 2015)

hounddogman said:


> Guess it's settled then, Euius. Your N=1 sample size is very convincing.


He's also in a market where his earnings are being subsidized by Uber's investors.


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## wpguy1967 (Jul 15, 2016)

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.


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## hounddogman (Aug 23, 2016)

Ah, yes, the "that's just the way things are" view of the world.


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## hounddogman (Aug 23, 2016)

Yeah that doesn't make any sense.


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## wpguy1967 (Jul 15, 2016)

hounddogman said:


> Ah, yes, the "that's just the way things are" view of the world.


People always have the option to learn a skill or trade. Then they wouldn't be here on this forum complaining about Uber.


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## Taxi Driver in Arizona (Mar 18, 2015)

wpguy1967 said:


> 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.


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## hounddogman (Aug 23, 2016)

wpguy1967 said:


> People always have the option to learn a skill or trade.


No, they don't.


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## Karl Marx (May 17, 2016)

hounddogman said:


> *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.
> ...


Let them eat car payments.


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## ExpendableAsset (Aug 12, 2015)

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.


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## renbutler (Jul 25, 2015)

ExpendableAsset said:


> So I would add that Uber used deceptive advertising and unethical business practices to artificially accelerate growth.


How is that unethical or artificial?

If an event advertises that "lots of good seats are available," and then everybody snatches them up and good seats are no longer available, was that unethical or artificial? Sounds like good marketing.

Now, if they _continued_ to state that current drivers were making money that they were not actually making, after the rate cuts and declining per-driver revenue, then it would indeed be unethical. But it sounds like they have largely stopped saying that Uber is big money, and instead they sell it as extra cash.


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## ExpendableAsset (Aug 12, 2015)

renbutler said:


> How is that unethical or artificial?
> 
> If an event advertises that "lots of good seats are available," and then everybody snatches them up and good seats are no longer available, was that unethical or artificial? Sounds like good marketing.
> 
> Now, if they _continued_ to state that current drivers were making money that they were not actually making, after the rate cuts and declining per-driver revenue, then it would indeed be unethical. But it sounds like they have largely stopped saying that Uber is big money, and instead they sell it as extra cash.


Working with unethical lenders to provide subprime loans to drivers, and then cutting the drivers pay so that they cannot pay said loans, is the very definition of unethical. Telling drivers inflated figures about what they will be making every week is deceptive. What part do you not understand?


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## renbutler (Jul 25, 2015)

ExpendableAsset said:


> Working with unethical lenders to provide subprime loans to drivers, and then cutting the drivers pay so that they cannot pay said loans, is the very definition of unethical. Telling drivers inflated figures about what they will be making every week is deceptive. What part do you not understand?


Thanks for the response, except for the pointlessly snarky last sentence.

The subprime loan part seems to be unethical, I grant that.

As for telling drivers they will make a certain amount -- I don't think that's accurate. The advertisers said that "top drivers" make "XYZ amounts." I seriously doubt that anybody at Uber ever promised that "everybody WILL make this much gross income driving for Uber." It's not their fault if people fall for the ages-old "best-case scenario" ad. It's not unethical if a reasonably intelligent person knows what it means.


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## ExpendableAsset (Aug 12, 2015)

renbutler said:


> Thanks for the response, except for the pointlessly snarky last sentence.
> 
> The subprime loan part seems to be unethical, I grant that.
> 
> As for telling drivers they will make a certain amount -- I don't think that's accurate. The advertisers said that "top drivers" make "XYZ amounts." I seriously doubt that anybody at Uber ever promised that "everybody WILL make this much gross income driving for Uber." It's not their fault if people fall for the ages-old "best-case scenario" ad. It's not unethical if a reasonably intelligent person knows what it means.


Perhaps you should research the proper definition of ethical.


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## renbutler (Jul 25, 2015)

ExpendableAsset said:


> Perhaps you should research the proper definition of ethical.


Okay, then, you've decided it's going to be one of THOSE conversations.

Sorry, I only discuss ideas, not condescension.

Moving on.


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## ExpendableAsset (Aug 12, 2015)

renbutler said:


> Okay, then, you've decided it's going to be one of THOSE conversations.
> 
> Sorry, I only discuss ideas, not condescension.
> 
> Moving on.


Please, move on at your leisure. Great talking to you.


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## ExpendableAsset (Aug 12, 2015)

While perhaps not technically correct in the legal sense, Hal does have a pretty good understanding of how this whole shell game works.


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## uberdriverfornow (Jan 10, 2016)

uber strike said:


> SO WHAT CAN YOU DO TO NOT PUT SO MANY MILES ON YOUR CAR? GUESS YOU DIDN'T THINK ABOUT THAT ONE.


if you want to make money then you have to put miles on your car, then you write those miles off at the end of the year


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## uber strike (Jan 10, 2016)

uberdriverfornow said:


> if you want to make money then you have to put miles on your car, then you write those miles off at the end of the year


but they will still be on your odometer. can't write them off of there. your car is going to have no value in 3 years time. (full time driving). that's 25,000 toward uber. and another 25,000 if you want a new car. 
this is why uber is not a living wage. you're just getting a loan to pay off your car.


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## hounddogman (Aug 23, 2016)

And, people only have cars nice enough to drive and abuse for Uber because there is an auto loan bubble in this country.


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## renbutler (Jul 25, 2015)

uber strike said:


> but they will still be on your odometer. can't write them off of there. your car is going to have no value in 3 years time. (full time driving). that's 25,000 toward uber. and another 25,000 if you want a new car.


$25,000? For Uber cars?

I found your problem right there.


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## renbutler (Jul 25, 2015)

hounddogman said:


> And, people only have cars nice enough to drive and abuse for Uber because there is an auto loan bubble in this country.


You keep saying that, but then a lot of us get by with very inexpensive cars to drive for Uber without any auto loans. But you guys just stick your fingers in your ears and pretend this isn't true.


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## uber strike (Jan 10, 2016)

renbutler said:


> $25,000? For Uber cars?
> 
> I found your problem right there.


i see nice new cars on the road all the time. i can only speak for LA/OC market. these drivers need to know the facts.
but you are right, why would someone run their personal car to the ground for uber. uber offers drivers the opportunity to drive a 2001 (Los Angeles). investing a couple grand in a uber car would be smart. this is the best way to maximize your profits. you run this cheap old car to the ground and it won't hurt you. plus you don't even have to pay full coverage. liability only.


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## drexl_s (May 20, 2016)

hounddogman said:


> This is a piece of research I have been working on since a friend of mine became an on-demand driver. This has not been posted or published anywhere else online.
> 
> *Synopsis: *I argue that Uber's success and growth depends primarily on:
> 
> ...


So hounddogman you state "desperate" and "ready to abuse their most valuable asset" Well, not to burst your bubble, but those same individuals, driving a Camry, like myself, make 5cents for every mile we abuse our cars. Yes, we make, not lose as everyone on here claims to state. Actual depreciation costs are over stated, the incremental depreciation is much less, 2.5 cents per mile, add new tires, maint, repairs, and gas, total depreciation /cost to drive the car into the ground is 21.6 cents per mile for my camry. Now, tax deduction is 54 cents; tax benefit for deducting every mile driven is 26.7 cents per mile; netting me 5 cents "income" per every mile I drive for Uber. My tax rate used is 25% Fed, 9.3% CA, 12.4% OASDI and 2.9% medicare. You and everyone go ahead and scare people about the cost of driving, more miles for me to drive and more money to make. Now wages per hour are not that great, but you should know better that in this business, using your own car is a benefit; and stop insulting drivers as desperate. Hopefully this is not your thesis, you need to do more work on your research.


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## uberdriverfornow (Jan 10, 2016)

uber strike said:


> but they will still be on your odometer. can't write them off of there. your car is going to have no value in 3 years time. (full time driving). that's 25,000 toward uber. and another 25,000 if you want a new car.
> this is why uber is not a living wage. you're just getting a loan to pay off your car.


Ok, I'm going to give it to you straight. I have a mid 2000's Honda. I get 30 mpg on average. I bought it for $7k. I make atleast $1k a week doing UberX, sometimes making $1250 driving about 40-45 hours a week. My car payment is $150 after putting 3k down. I'm spending about 15-20 a day on gas while making about $120 a day on average about 6 days a week. If I work Friday and Saturday I'm doing $200 each day. Add in the $225 each week from the power driver bonus and I'm clearing $1k each week.

I do all my own car service so I have no costs. I also take advantage of the plenty of promotions that come my way, making sure to try to stay within the middle of the bonus area to make sure that most of my trips originate inside the bonus area for when I get that one trip that takes me far outside my area.

Yes, you have morons buying brand new cars for $25k and then putting 100k on them in 2-3 years and seeing the value drop to $10-$12k. Yes, if you do that, you're killing the value. But if you're smart you don't do that. So yeah you can keep quoting the morons that love throwing away profit but not all of us are doing that. If you work hard and do things right and get a good system you can make money however I'm also in a pretty good market so that helps.

This may all change the next time Uber cuts the rates but who knows.


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## Milito (Apr 26, 2016)

hounddogman said:


> Guess it's settled then, Euius. Your N=1 sample size is very convincing.


Don't mind him, he is uber rep, he doesn't even buy what he wrote.


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## elelegido (Sep 24, 2014)

Without a clearly defined hypothesis to prove or disprove, this "analysis" all seems a bit of an unfocused ramble.


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## Milito (Apr 26, 2016)

uber strike said:


> i see nice new cars on the road all the time. i can only speak for LA/OC market. these drivers need to know the facts.
> but you are right, why would someone run their personal car to the ground for uber. uber offers drivers the opportunity to drive a 2001 (Los Angeles). investing a couple grand in a uber car would be smart. this is the best way to maximize your profits. you run this cheap old car to the ground and it won't hurt you. plus you don't even have to pay full coverage. liability only.


Same in miami, brand new camrys, optimas, sonatas, lexus, infinitys escalades. Etc


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## ExpendableAsset (Aug 12, 2015)

elelegido said:


> Without a clearly defined hypothesis to prove or disprove, this "analysis" all seems a bit of an unfocused ramble.


He actually defines what this is all about in the very first part of his post. The hypothesis is that Uber's success is dependent on all the factors that he discusses in detail in the body of this essay. The facts provided generally support the conclusions made by the author.


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## renbutler (Jul 25, 2015)

uber strike said:


> i see nice new cars on the road all the time.


Yeah, it's it's generally a horrible idea for all the owners. But people gotta keep up with each others' illusion of wealth, amirite?


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## hounddogman (Aug 23, 2016)

ExpendableAsset said:


> He actually defines what this is all about in the very first part of his post. The hypothesis is that Uber's success is dependent on all the factors that he discusses in detail in the body of this essay. The facts provided generally support the conclusions made by the author.


Yeah, if you need me to water it down and walk you through it, elelegido, I am happy to help.


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## hounddogman (Aug 23, 2016)

drexl_s said:


> So hounddogman you state "desperate" and "ready to abuse their most valuable asset" Well, not to burst your bubble, but those same individuals, driving a Camry, like myself, make 5cents for every mile we abuse our cars. Yes, we make, not lose as everyone on here claims to state. Actual depreciation costs are over stated, the incremental depreciation is much less, 2.5 cents per mile, add new tires, maint, repairs, and gas, total depreciation /cost to drive the car into the ground is 21.6 cents per mile for my camry. Now, tax deduction is 54 cents; tax benefit for deducting every mile driven is 26.7 cents per mile; netting me 5 cents "income" per every mile I drive for Uber. My tax rate used is 25% Fed, 9.3% CA, 12.4% OASDI and 2.9% medicare. You and everyone go ahead and scare people about the cost of driving, more miles for me to drive and more money to make. Now wages per hour are not that great, but you should know better that in this business, using your own car is a benefit; and stop insulting drivers as desperate. Hopefully this is not your thesis, you need to do more work on your research.


Are you assuming that everyone who buys into either driving for Uber with their own car, or as an Indentured Driver, has worked out the margins--to the cent--like you have? I guess you think your experience, and situation, is reflective of the broader Uber-Partner population. Again, your N=1 sounds fairly representative.


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## hounddogman (Aug 23, 2016)

renbutler said:


> You keep saying that, but then a lot of us get by with very inexpensive cars to drive for Uber without any auto loans. But you guys just stick your fingers in your ears and pretend this isn't true.


I congratulate you on your success.


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## renbutler (Jul 25, 2015)

Uh, thanks, I guess (assuming that wasn't sarcastic), but that's really not my point.

The point is obvious: You don't need an expensive vehicle to drive for Uber, and Uber never told anybody they needed an expensive car.

In fact, the limited requirements of cars to meet eligibility make it quite attainable for the average person. I could have satisfied the requirements with a vehicle even more affordable than my $6k van, but the one I have is what my wife wanted for daily use.


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## elelegido (Sep 24, 2014)

ExpendableAsset said:


> He actually defines what this is all about in the very first part of his post. The hypothesis is that Uber's success is dependent on all the factors that he discusses in detail in the body of this essay. The facts provided generally support the conclusions made by the author.


No. Note that I said "clearly defined". The hypothesis of a thesis should be able to be proved or disproved. However, this is not possible in this case because the author does not define "success" for Uber. What is success? Not going bankrupt? Securing more funding? If so, how much? Or, does success mean breaking even? Or turning a profit? How much profit? Maybe an absolute profit figure, or possibly just more profit than competitors? Or maybe success is non monetary. Is it the creation of jobs for drivers? Or providing services in the community?

Who knows? All he says is "success" (and, similarly, "growth", which is equally undefined). As I mentioned, if the hypothesis is not clearly and unequivocally defined, it cannot be proved or disproved. (If we don't know what success is, we can't know whether they have achieved it or not, or attribute it to any of the claimed factors).

That's just the start of what's wrong with this thesis. There's a lot more about it which would make it worthy of an "F" from any first year college tutor, but I won't go into that.

Needs improvement!


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## elelegido (Sep 24, 2014)

hounddogman said:


> Yeah, if you need me to water it down and walk you through it, elelegido, I am happy to help.


Don't try to be facetious, son, when you don't have the intellectual weight to back it up. You only make yourself look foolish.


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## elelegido (Sep 24, 2014)

renbutler said:


> The point is obvious: You don't need an expensive vehicle to drive for Uber, and Uber never told anybody they needed an expensive car.
> 
> In fact, the limited requirements of cars to meet eligibility make it quite attainable for the average person. I could have satisfied the requirements with a vehicle even more affordable than my $6k van, but the one I have is what my wife wanted for daily use.


You are entirely correct, and that is one of the many issues with the OP's analysis. He says Uber relies on an:

_"Auto loan bubble (so enough 'new' vehicles that meet Uber's vehicle requirements are available for people"
_
However, he does not define what "new" (1 week old? 1 year? 2 years? etc) means, nor does he tell us the percentage of the fleet that is "new"; nor, of that number, how many are financed.

With no figures provided by the OP on this, we have no idea what the age distribution of cars in the fleet is, or whether or not they are owned or are liabilities. Maybe only 10% of Uber drivers own brand new cars which they financed for Ubering with. Maybe it's 20%. Who knows? Maybe the majority of drivers are like you and me, driving 5+ year old cars which are paid for. Again, who knows? Without any figures at all, it's impossible to do any kind of analysis, much less draw any conclusions.


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## ubershiza (Jan 19, 2015)




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## Fuzzyelvis (Dec 7, 2014)

hounddogman said:


> And, people only have cars nice enough to drive and abuse for Uber because there is an auto loan bubble in this country.


John Oliver did a piece on this recently. Santander was mentioned, although not Uber, unfortunately.


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## wpguy1967 (Jul 15, 2016)

You all better fully understand that in almost all cases, you are paid based on you level of skill. There is simply no skill involved in something a 16 year old can do. In my state, you can drive at 15 on a learner's permit. 

So again, when there is no skill there is very little pay. Back in the heyday when Uber launched when drivers were making "$40/hr" was unsustainable and market forces were always going to bring that number down. 

Now, you'll have to follow me on this one; the employees, not employers set the wage. If a business needs 100 workers, it's their job AND duty to pay the least amount possible while getting the maximum in quality. Employees determine that. If that employer hires 100 "idiots" at $7.50 who mess up the job, then then the employer may lose money. So now the ad is out for $9 - $11 - $15/hr - whatever it takes where he pays the least but also gets the best quality. 

If you have an ethical issue with that, answer this; you need someone to mow your lawn. Two people apply and the result in quality is identical:

Steve: $50
Mike: $150 but he has two kids and a mortgage. 

You're hiring Steve because the quality is the same. You just want your lawn mowed and Mike's bills aren't your problem. 

So if Pax were complaining right and left and business was dropping off because too many people were taking the job for "$9/hr" then Uber would raise the compensation and "fire" all the poor drivers. 

But that's not happening, is it. Good drivers are willing to take this job at "$9/hr" which means that's what the market commands for a job that involves zero skill. If you want to earn $25/hr, maybe look into being a machinist or electrician.


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## hounddogman (Aug 23, 2016)

elelegido said:


> You are entirely correct, and that is one of the many issues with the OP's analysis. He says Uber relies on an:
> 
> _"Auto loan bubble (so enough 'new' vehicles that meet Uber's vehicle requirements are available for people"
> _
> ...


I'll take each of these in turn.

Regarding the definition of what a "new" car means, I address it here: "Uber has very specific vehicle requirements for the cars that it will allow potential drivers to use, which, depending if drivers choose either the UberX or XL program, vary by city. It claims that, at a minimum, cars must be manufactured no earlier than 2001, although a quick glance at the requirements by-city shows that 2005 looks to be about average, with 2011 the oldest model it will accept in its largest market, New York City."

"..does he tell us the percentage of the fleet that is "new"; nor, of that number, how many are financed."

This data is not public. But it's pretty clear you work for Uber, so if you can get me those numbers, that would be great.

"With no figures provided by the OP on this, we have no idea what the age distribution of cars in the fleet is..."

Again, not available.

"Without any figures at all, it's impossible to do any kind of analysis, much less draw any conclusions."

But I did.


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## hounddogman (Aug 23, 2016)

elelegido said:


> No. Note that I said "clearly defined". The hypothesis of a thesis should be able to be proved or disproved. However, this is not possible in this case because the author does not define "success" for Uber. What is success? Not going bankrupt? Securing more funding? If so, how much? Or, does success mean breaking even? Or turning a profit? How much profit? Maybe an absolute profit figure, or possibly just more profit than competitors? Or maybe success is non monetary. Is it the creation of jobs for drivers? Or providing services in the community?
> 
> Who knows? All he says is "success" (and, similarly, "growth", which is equally undefined). As I mentioned, if the hypothesis is not clearly and unequivocally defined, it cannot be proved or disproved. (If we don't know what success is, we can't know whether they have achieved it or not, or attribute it to any of the claimed factors).
> 
> ...


Yes, I use the measure of growth, here, defined as = increased number of drivers.

And, if you can find the word "profit" in my OP, please let me know.


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## renbutler (Jul 25, 2015)

hounddogman said:


> I'll take each of these in turn.
> 
> Regarding the definition of what a "new" car means, I address it here: "Uber has very specific vehicle requirements for the cars that it will allow potential drivers to use, which, depending if drivers choose either the UberX or XL program, vary by city. It claims that, at a minimum, cars must be manufactured no earlier than 2001, although a quick glance at the requirements by-city shows that 2005 looks to be about average, with 2011 the oldest model it will accept in its largest market, New York City."


Even using the most stringent 2011 requirement, nobody in their right mind would consider a six-year-old vehicle "new." (Yes, six years, as 2011 models were introduced late in 2010.)

In just about every other market, you can drive a decade-old vehicle. Which, to a lot of people, is like driving a Model T.


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## hounddogman (Aug 23, 2016)

renbutler said:


> The point is obvious: You don't need an expensive vehicle to drive for Uber, and Uber never told anybody they needed an expensive car.


Interesting that you extrapolate your personal financial definition of expensive to the greater population.


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## renbutler (Jul 25, 2015)

hounddogman said:


> Interesting that you extrapolate your personal financial definition of expensive to the greater population.


It's very easy to figure out what I mean in the context of the thread:

Nobody is going into massive amounts of debt financing a $6000 car.

I thought this was pretty obvious, but I'm glad to clear this up for you.

Bottom line, sure, many people do NOT have the cash to buy a $6000 vehicle, but any adult who has been working for more than a couple years _should_ have that ability to save that much. And blowing huge sums of money on things you don't need isn't a good excuse.


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## hounddogman (Aug 23, 2016)

"any adult who has been working for more than a couple years _should_have that ability to save that much."

But they don't, and it is one (not the sole) driving force behind a lot of the anger you see in the current presidential election, and especially in the Bernie Sanders primary run.


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## renbutler (Jul 25, 2015)

hounddogman said:


> But they don't, and it is one (not the sole) driving force behind a lot of the anger you see in the current presidential election, and especially in the Bernie Sanders primary run.


Although the government clearly has a hand in the mess, most people's inability to save is on themselves. We live in a highly materialistic and consumer-driven society.

See: Car ownership. A lot of people buy cars primarily to get to work -- to earn money to pay for their cars! It's outrageous.

And then they blame the government or corporations for their own bad choices. There's a lot to blame government for, but not bad personal spending habits.


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## hounddogman (Aug 23, 2016)

That is one narrative about people's "choices", yes.


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## wpguy1967 (Jul 15, 2016)

So, I'm curious, what exactly to the "Uber haters" here think they should make per hour after all taxes and expenses? $25/hr?

If so, that's 52K a year......to drive a car around. People with a skilled trade who ACTUALLY work all day don't make that.

Here's what's irrelevant:

1) The cost of your car
2) Your bills
3) Whether or not you have kids to feed
4) The amount of your mortgage or rent

None of those are a factor in how much a job should pay.


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## ExpendableAsset (Aug 12, 2015)

wpguy1967 said:


> So, I'm curious, what exactly to the "Uber haters" here think they should make per hour after all taxes and expenses? $25/hr?
> 
> If so, that's 52K a year......to drive a car around. People with a skilled trade who ACTUALLY work all day don't make that.
> 
> ...


I actually think that anyone who is doing their job for 40 hours a week or more probably deserves about 50k a year, even if they did not get into college. I wonder if that makes me a socialist. Anyway, when people make more they have more to spend, which creates more good paying jobs and so on.


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## wpguy1967 (Jul 15, 2016)

ExpendableAsset said:


> I actually think that anyone who is doing their job for 40 hours a week or more probably deserves about 50k a year, even if they did not get into college. I wonder if that makes me a socialist. Anyway, when people make more they have more to spend, which creates more good paying jobs and so on.


Well allow math to dispel your theory:

Sub shop owner, small, with a staff of 10 full-time employees. Each of those employees in your fantasy earn 50K a year. Employee costs alone are $500,000 without factoring in a single other expense.

He sells subs for $8 a pop. Employee payroll is $10,000 a day. Divide that into $8 and he has to sell 1,250 subs a day.

In reality that sub shop owner nets around 20% off each sub. So in order for him to pay for his $50K a year employees, he'd have to sell 5,000 subs a day.


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## ExpendableAsset (Aug 12, 2015)

wpguy1967 said:


> Well allow math to dispel your theory:
> 
> Sub shop owner, small, with a staff of 10 full-time employees. Each of those employees in your fantasy earn 50K a year. Employee costs alone are $500,000 without factoring in a single other expense.
> 
> ...


But then of course alot more people could afford to buy subs, potentially increasing his sales even further.


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## wpguy1967 (Jul 15, 2016)

ExpendableAsset said:


> But then of course alot more people could afford to buy subs, potentially increasing his sales even further.


Not really correct at all. In my example, that sub shop owner would need to sell, actually 7,500 subs a day to make payroll and pay his expenses. If he operates 12 hours a day, that's 625 subs per hour or six subs in one minute - which cannot be done....and that assume he's selling 6 subs per minute every single minute he's open for 12 hours straight. Mathematically impossible.

In reality, most of his business is going to be 5 hours out of 12. This means he'd have to make 18 subs per minute.

He's have to hire more people, but now he'd have to sell every more per day.

Then you'd need this to happen; people are making 50K a year instead of 20K a year, so you're now assuming they're going to eat subs every day. That's incorrect.


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## ExpendableAsset (Aug 12, 2015)

wpguy1967 said:


> Not really correct at all. In my example, that sub shop owner would need to sell, actually 7,500 subs a day to make payroll and pay his expenses. If he operates 12 hours a day, that's 625 subs per hour or six subs in one minute - which cannot be done....and that assume he's selling 6 subs per minute every single minute he's open for 12 hours straight. Mathematically impossible.
> 
> In reality, most of his business is going to be 5 hours out of 12. This means he'd have to make 18 subs per minute.
> 
> ...


I am just making a generalization. America has done really well since WWII, and if I am not mistaken, a great deal of that success is due to consumer spending. People having money to spend on goods and services has built one of the strongest economies in the world with one of the highest standards of living. And I am not saying that teenage kids working part time at a sandwich shop should make 50k a year, but an independent contractor utilizing his own valuable assets certainly should.


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## renbutler (Jul 25, 2015)

Unless, of course, there are people willing to do it for far less.

And there obviously are.

The free market sets wages. We essentially bid on Uber's price as long as we download the app and accept requests. 

As long as there is a supply of cheap labor, labor will continue to be cheap.


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## ExpendableAsset (Aug 12, 2015)

renbutler said:


> Unless, of course, there are people willing to do it for far less.
> 
> And there obviously are.
> 
> ...


I get what you are saying Ren, but I think the whole point of this thread is that keeping driving wages low is not sustainable. It is bad for the company as well as the driver.


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## wpguy1967 (Jul 15, 2016)

This is correct. The market sets the wages for everything. If hotel maids didn't think it was worth it to to clean rooms for the pay they get, they would be no hotel maids and hotels would have to raise the pay.

Regarding Uber, please remember that people are only willing to spend a certain amount. So if Uber drivers banded together, all went on strike and "demanded" $18/hr minimum, likely Uber would shut their doors. Not feasible.


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## renbutler (Jul 25, 2015)

wpguy1967 said:


> Regarding Uber, please remember that people are only willing to spend a certain amount. So if Uber drivers banded together, all went on strike and "demanded" $18/hr minimum, likely Uber would shut their doors. Not feasible.


That's why the true US minimum wage is actually $0/hour. 

I'd prefer that there be a small number of $8/hour jobs than everything either $0 or $10+.


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## wpguy1967 (Jul 15, 2016)

ExpendableAsset said:


> I get what you are saying Ren, but I think the whole point of this thread is that keeping driving wages low is not sustainable. It is bad for the company as well as the driver.


Who says it's not sustainable. Does fast food seem to have a problem with people working grueling days at $8.50? Nope. It's not bad for Uber. Were it bad for Uber, Pax would be complaining about horrible service. In fact, I'd be willing to bet that overwhelmingly people are happy with their rides.

What you don't want to account for is there are plenty of people with next to no bills who are more than happy to drive around at $10/hr as opposed to working fast food.

This really hurts Uber drivers who have a lot of bills to pay, but their bills aren't Uber's problem.


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## Atom guy (Jul 27, 2016)

hounddogman said:


> That's a good point, atom guy.
> 
> What started all of this is seeing cars that I know cost twice as much as mine--and much newer--being flat out abused by their owners using the car to drive for Uber. Has Uber been able to make ALL of these people mentally devalue their cars to make money now--drastically discount its future value, or are people that desperate because they should not have bought the vehicle in the first place?
> 
> I am starting to think it is the latter, that Uber was just been able to take advantage of the situation.


I used to sell cars. People are surprisingly willing to overextend themselves on a vehicle. It's that important to people's self image. Then, when the ether wears off, they are stuck with a huge payment they have no hope of keeping with. I had to keep reminding myself that I was not a financial advisor.


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## Atom guy (Jul 27, 2016)

hounddogman said:


> "any adult who has been working for more than a couple years _should_have that ability to save that much."
> 
> But they don't, and it is one (not the sole) driving force behind a lot of the anger you see in the current presidential election, and especially in the Bernie Sanders primary run.


It is interesting that most "anti-poverty" programs actually require the people who participate to remain in poverty in order to participate


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## renbutler (Jul 25, 2015)

Wait a minute, is that deaths per x number of people with the jobs, or total deaths per profession?

I mean, certainly you understand those distinctions tell two completely different stories -- one that is useful to the discussion, and one that is not...


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## elelegido (Sep 24, 2014)

hounddogman said:


> Yes, I use the measure of growth, here, defined as = increased number of drivers.
> 
> And, if you can find the word "profit" in my OP, please let me know.


Well, that's just it - there's no mention of anything that would define what you're talking about regarding what "success" is. You now imply that you don't mean profit. I guess it must be something else.

If we don't know what you are trying to say with "success", then the only thing we've got to go on is growth, which you have defined as simply "an increased number of drivers". Before Uber started, it had zero drivers. Then, after it was founded, it took on its very first driver. One driver is greater than zero drivers; it is an increased number of drivers. Therefore, Uber hiring its first driver fulfills your definition of growth. Then, according to you, Uber's "growth" was due to a desperate workforce in the USA and because of an auto bubble. These are all your definitions and assertions. I have to say that I disagree with you - I don't think that this "growth" was due to any bubble or underemployment - in all likelihood it was just a case of Travis talking to one of his buddies or acquaintances and asking him if he wanted to be the first driver help him out with a new business he was trying to get off the ground.

So, do you see why it's important to properly define what you're trying to prove? If you don't, then conclusions that can correctly be drawn from them are likely to be worthless. Maybe your "increased number of drivers" means something different for you. Maybe it means the increase from the 10th driver to the 1000th driver, for example. Or, maybe, you take it to mean the increase from the 100,000th to the 200,000th driver. Who knows?

With the rest of your analysis, all you have done is gather some general economic and industry data and present it as proof of what you are trying to say.

You show labor participation decreasing, and driver numbers increasing and deduce that increased driver numbers depend on a decreasing labor participation. That is an invalid deduction, based solely on saying, "look, that number's going down and this one's going up". Maybe the two are correlated. Maybe not. Who knows? The only way to tell would be to do something like a a regression analysis to see for sure. Which you do not do. And, even if the two are correlated, that does not mean that one is a necessary condition for the other. In order for you to prove that Uber draws from those who have given up on the labor market, you would have to poll a statistically representative sample of Uber drivers and find out their pre-uber circumstances - employed, unemployed and looking for work, or unemployed and not looking for work. Only then would you know how much Uber draws from the economically inactive group. You certainly cannot know this just by looking at a couple of graphs.

Then you say that Uber depends on an automotive bubble of financed vehicles. But as you later say, you do not know how many vehicles Uber drivers have financed, nor what percentage of the fleet is financed:


> This data is not public


Maybe only 10% of the fleet is financed. Maybe it's 5%. Again, who knows? We can't make the leap to claiming that Uber depends on financed vehicles if we don't even know how many are financed.

Anyway, that's why I said that your analysis is unfocused. You're not sure of exactly what you are trying to show, and then you try to prove it with just a general collection of economic and industry data, and no data at all which supports the assertions you are trying to make. Lots and lots of maybes and conjecture. sure, but to resent this as a "research" paper? Sorry, no.


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## Fuzzyelvis (Dec 7, 2014)

wpguy1967 said:


> Well allow math to dispel your theory:
> 
> Sub shop owner, small, with a staff of 10 full-time employees. Each of those employees in your fantasy earn 50K a year. Employee costs alone are $500,000 without factoring in a single other expense.
> 
> ...


How is $500,000 a year $10,000 a day?

A "small sub shop" owner wouldn't have 10 employees in the first place, unless some were part time.


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## elelegido (Sep 24, 2014)

Fuzzyelvis said:


> How is $500,000 a year $10,000 a day?
> 
> A "small sub shop" owner wouldn't have 10 employees in the first place, unless some were part time.


The Ubermath was strong in that post.


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## Fuzzyelvis (Dec 7, 2014)

renbutler said:


> I don't think any serious observer buys that.
> 
> Even in the dangerous places some of you choose to live in for some strange reason, I doubt it's true.


Most people living in dangerous places are again, not doing it out of choice.

Your arguments all make sense if someone has a good education and a 120 IQ. But what you are doing is saying it is ok to blame the not so intelligent for their poor choices when Uber is manipulating them into those choices.

The elderly person who is not able to make good financial decisions and who is sucked into some Nigerian scam may be "stupid" but they're still a victim. Just because the victim "should have known better" doesn't make it ok to take advantage of them and that's what Uber specialises in.


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## hounddogman (Aug 23, 2016)

elelegido said:


> Well, that's just it - there's no mention of anything that would define what you're talking about regarding what "success" is. You now imply that you don't mean profit. I guess it must be something else.
> 
> If we don't know what you are trying to say with "success", then the only thing we've got to go on is growth, which you have defined as simply "an increased number of drivers". Before Uber started, it had zero drivers. Then, after it was founded, it took on its very first driver. One driver is greater than zero drivers; it is an increased number of drivers. Therefore, Uber hiring its first driver fulfills your definition of growth. Then, according to you, Uber's "growth" was due to a desperate workforce in the USA and because of an auto bubble. These are all your definitions and assertions. I have to say that I disagree with you - I don't think that this "growth" was due to any bubble or underemployment - in all likelihood it was just a case of Travis talking to one of his buddies or acquaintances and asking him if he wanted to be the first driver help him out with a new business he was trying to get off the ground.
> 
> ...


lol this isn't weird or anything. Definitely sad as hell.


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## elelegido (Sep 24, 2014)

hounddogman said:


> lol this isn't weird or anything. Definitely sad as hell.


Don't sell yourself short - you posting your analysis with all your synopsis, assertions, charts & graphs etc is _not _sad as hell. Some people here are interested in a more academic and scientific study of what makes Uber tick. But, for the reasons I mentioned, yours is neither.


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## hounddogman (Aug 23, 2016)

See I thought this was the Journal of Economic Literature, _not_ the Quarterly Journal of Economics.


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## elelegido (Sep 24, 2014)

hounddogman said:


> See I thought this was the Journal of Economic Literature, _not_ the Quarterly Journal of Economics.


Looks like you've been schooled in many different things in the space of one thread.


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## hounddogman (Aug 23, 2016)

Nah.


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## NFIH (Jul 26, 2016)

hounddogman said:


> This is a piece of research I have been working on since a friend of mine became an on-demand driver. This has not been posted or published anywhere else online.
> 
> *Synopsis: *I argue that Uber's success and growth depends primarily on:
> 
> ...


Just had a read of this for the first time. Mirrors exactly what I've been saying in the Toronto forums--as far as I can tell, Uber's success bears an inverse relationship to the state of the wider economy. If the economy is doing well, Uber will tend to do poorly and vice versa. (For those reasons, I certainly don't see the rise of the so-called "gig economy" as a positive development for society. It's really a sign of decline, IMO.)

Anyway, the skills you show with this lead me to suspect you may be a journalist or some other kind of communications professional. Did you try shopping this around first to some mainstream media outlets? It seems like the kind of thing the more sophisticated among them might have been willing to consider publishing.

Whatever the case, this is fantastic work and I greatly appreciate you taking the time and effort to produce it.


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## renbutler (Jul 25, 2015)

Fuzzyelvis said:


> Most people living in dangerous places are again, not doing it out of choice.
> 
> Your arguments all make sense if someone has a good education and a 120 IQ. But what you are doing is saying it is ok to blame the not so intelligent for their poor choices when Uber is manipulating them into those choices.
> 
> The elderly person who is not able to make good financial decisions and who is sucked into some Nigerian scam may be "stupid" but they're still a victim. Just because the victim "should have known better" doesn't make it ok to take advantage of them and that's what Uber specialises in.


Your argument makes sense if you don't compare Uber to a Nigerian scam.

Good grief.

And, yes, people need to take more responsibility for their own bad choices. I know a lot of people who have the capacity to think smartly, but chose not to pay enough attention in school and continue choosing not to listen to wise advice today.

I made stupid financial decisions when I was younger, and I've never blamed a bank or a corporation or anybody else my myself.


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## renbutler (Jul 25, 2015)

NFIH said:


> Just had a read of this for the first time. Mirrors exactly what I've been saying in the Toronto forums--as far as I can tell, Uber's success bears an inverse relationship to the state of the wider economy. If the economy is doing well, Uber will tend to do poorly and vice versa. (For those reasons, I certainly don't see the rise of the so-called "gig economy" as a positive development for society. It's really a sign of decline, IMO.)
> 
> Anyway, the skills you show with this lead me to suspect you may be a journalist or some other kind of communications professional. Did you try shopping this around first to some mainstream media outlets? It seems like the kind of thing the more sophisticated among them might have been willing to consider publishing.
> 
> Whatever the case, this is fantastic work and I greatly appreciate you taking the time and effort to produce it.


I actually have a journalism background (both a degree and real-world experience in a not-too-distant past), and even with the industry in a shambles, there's no part of the OP that is worthy of publishing. Others have already picked it apart quite easily, so I won't repeat their efforts.


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## NFIH (Jul 26, 2016)

renbutler said:


> I actually have a journalism background (both a degree and real-world experience in a not-too-distant past), ...


So do I, as it happens.



> ... and even with the industry in a shambles, there's no part of the OP that is worthy of publishing. Others have already picked it apart quite easily, so I won't repeat their efforts.


To each his own. Of course, when I say "published" that doesn't mean foregoing thorough editing, additional research, interviews and so on. Access to a Bloomberg terminal wouldn't hurt either. But that's the kind of resource heft a mainstream media publication can provide if an editor thought there was something here that could be further developed. And I certainly do. For an off-the-cuff analysis, I think it's just fine. And its larger themes do certainly dovetail with some of the research I've seen from the Federal Reserve banks on the impact of the financial crash of 2008 regarding the below-trend (GDP) growth that has since occurred, the elevated levels of personal indebtedness (though decreasing somewhat of late in the US), a historically depressed participation rate that can't be satisfactorily explained by baby boomer retirement, the impact of unusually low interest rates, and so on.


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## Euius (May 19, 2016)

Fuzzyelvis said:


> But what you are doing is saying it is ok to blame the not so intelligent for their poor choices


Yes, absolutely

Of course, that's not really relevant as things like XChange are not bad choices. At worst, they are slightly less than ideal for the perfect candidate. Perfect credit rating, many other options on earning etc. Those people are not the unintelligent


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## Fuzzyelvis (Dec 7, 2014)

TwoFiddyMile said:


> That's called a taxi (except the minimum ride is less).


I don't know what the minimum taxi ride is here but the rate is quite a bit higher per mile (Houston). Now where I live it's higher still (Sugar Land).

Where is a taxi still $1.50 per mile?


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## TwoFiddyMile (Mar 13, 2015)

My mortgage is $700 a month not including taxes.
Don't feed the bubble.


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## renbutler (Jul 25, 2015)

TwoFiddyMile said:


> My mortgage is $700 a month not including taxes.
> Don't feed the bubble.


Isn't it great living in a reasonably priced market? Not just for housing, but just about everything?


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## m1a1mg (Oct 22, 2015)

A few thoughts.

1. Uber doesn't require much skill, but it does require a bit. Otherwise you fall by the wayside quite quickly. 

2. In my area, I can buy a car that meets Uber criteria for under $5k, less than 100K miles, and less than 10 years old quite easily. As renbutler points out, quite well, it isn't hard to do. 

3. Everyone, especially the OP, thinks all Uber drivers are stupid. They aren't. In my market, military retirees driving moderately older cars make up a good chunk of the drivers. There are notable exceptions I've met. 

4. The numbers used in the analysis are from 1 1/2 years ago when Uber marketing for drivers was completely different. Currently, Uber markets to the part timer looking to make a few dollars extra each week. Retirees are perfect. And we don't drive like idiots. Don't blast our music, and for the most part, know how to deal with other human beings. Something I note that fast food employees aren't very good at these days. 

5. The OP made huge logic leaps that go over well on a site full of whiny children looking to get rich with no work, education, or motivation. Sorry, Bernie didn't win. You want more money? Get a student loan, go to school, graduate, and find a job. Many of you aren't willing to do those things, you want something for nothing, preferably on a schedule you get to pick. 

Welcome to the real world.


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## renbutler (Jul 25, 2015)

m1a1mg said:


> A few thoughts.
> 
> 1. Uber doesn't require much skill, but it does require a bit. Otherwise you fall by the wayside quite quickly.
> 
> ...


I really like this post.

I'll just make a little distinction regarding point #1.

Picking up people and driving them around safely doesn't take much skill. However, doing it profitably does. Knowing when and where to drive, and knowing how to maximize revenue and limit expenses (without greatly diminishing the quality of service) -- basically, running a very small business -- requires at least some basic business skills. It's not rocket surgery, but it's not something that any schmoe can do well.


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## Michael - Cleveland (Jan 1, 2015)

Atom guy said:


> Where Uber seems to be faltering is in new rider acquisition. A steady lowering of rates nationwide can only be seen as an attempt to increase ridership, but has the negative effect of removing drivers with nicer vehicles or higher auto loan payment needs off the platform. This has created a cycle of slowly worsening Uber cars, which scares off higher end passengers, which forces Uber to lower rates to attract more price conscious riders, which scares off more drivers with nicer cars etc..


I think that's a misreading of the system and Uber's marketing. While prices were lowered to make the system more affordable to more users (mass-market), new platforms were introduced to satisfy the demands of consumers willing to spend more for newer, larger cars (and, arguably, higher-end drivers). SELECT, LUX, XL, SUV, etc. are available to serve those clients today at near [and in some cases, less] the same cost of an X vehicle/driver three years ago.


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