Uber's unhired fleet floods used car market

Hundreds of unhired cars from a massive fleet owned by Uber have started appearing on the used-car market, just a week after the American ride-hailing app was switched off here. Mainly Mazda3 sedans and Honda Vezel crossovers bought by Uber-owned Lion City Rentals last year, the cars - with 50km clocked or less - are being sold at a loss of between $10,000 and $20,000 each.

While the cars are enjoying brisk sales because of their relatively low prices - $70,000-plus for a Mazda3, compared with around $90,000 for a brand new one - industry watchers and consumers worry that the deluge will have an impact on new and used car sales.

"It is bound to cause some disruption to the business, and upheaval to used and new car prices," said business consultant Anthony Leong, 67.

Close to 50 of the Lion City Rentals Mazda3s were advertised for sale on leading car retail portal sgCarMart last Sunday, six days after the Uber app was turned off here. According to sgCarMart, the cars were originally from authorised Mazda agent Eurokars and were still under warranty.

Mr. Raymond Tang, Managing Director of used car dealer Yong Lee Seng Motor, said the Lion City Rentals sale might have some impact on prices, but would probably affect cars such as the Mazda3 and Honda Vezel more. He reckons, however, that the market can absorb the cars, estimated at around 200 Vezels and as many Mazda 3s, which have already been sold to various used car dealers.

"After July, some new cars might become more expensive because of the new particulate-matter ruling, so people will look for pre-owned cars," he explained, referring to the new emission ruling that will start weighing fine particulate matter as one of five pollutants, which will determine whether a car gets a tax surcharge or rebate.

Many cars in their current form, including Mazda models, are expected to face surcharges. Lion City Rentals, like many other fleet owners, rushed to buy cars before the end of last year because the previous emission ruling was more lax. More cars enjoyed savings before 31^st December 2017.

The Uber company - which had around 14,000 cars - was already facing an unhired rate of around 10 percent then. The rush to buy more cars worsened this.

With Uber exiting the South East Asian market, rival Grab saying that it would not acquire Lion City Rentals' fleet, and taxi giant ComfortDelGro reviewing its deal to purchase a majority stake in the fleet, the rental company is now cutting losses.

Besides selling off cars, it is also seen scrapping many. This would bode well for the Certificate of Entitlement (COE) supply in the coming months, as it is determined by the number of vehicles scrapped.

Mr. Neo Nam Heng, Chairman of diversified motor group Prime, said Lion City Rentals' aggressive fleet expansion in the face of "so many unhired cars" had disrupted the COE market for the past few years. "Now, they are disrupting the used car market," he added. Last October, The Business Times reported that Uber may be under investigation by the Corrupt Practices Investigation Bureau (CPIB) over deals related to Lion City Rentals.

Both Uber and the CPIB have refused to comment on the alleged investigation. It was also reported last year that San Francisco-based Uber has been investigated by the U.S.A federal authorities over alleged trade espionage, as well as bribery in at least five Asian markets, including Malaysia and Indonesia.