Hannah Lutz/Crain’s Detroit Business-Automotive News – Detroit, MI — Toyota Motor Corp. has formed a partnership with Uber to provide flexible leasing options to the ride-sharing company’s drivers.
Toyota will begin the partnership on a trial basis in countries where ride-sharing is expanding, the company said Tuesday. A Toyota spokesman could not specify whether the leasing program will launch in the U.S.
Toyota and Uber hope to begin providing the new leasing options by the second half of the year, a spokesman said.
Uber drivers will be able to lease vehicles from Toyota Financial Services and make payments earned through their Uber compensation.
Many Uber drivers are not eligible for traditional lender financing because of low or poor credit scores, Chris Ballinger, Toyota Financial CFO and global chief officer of strategic innovation, said during a panel discussion at the American Financial Services Association’s Vehicle Finance Conference in Las Vegas in March, ahead of Tuesday’s announcement.
Ballinger said that 85 percent of Uber drivers have FICO scores below 650, which is generally considered to be subprime. Eighty-five percent of Toyota Financial’s new-vehicle borrowers, by contrast, have FICO scores above 650.
Uber drivers can use the money they make from cars as a source of repayment for the loan, he said. “It opens up a class of people to new-car ownership who never would have been eligible before,” he said.
Ballinger said in March that the new business model creates “a lot of opportunities for financial services companies.” And there will be even more opportunities when lenders launch fleet programs with ride-sharing companies, he added.
Toyota and Uber will explore collaboration opportunities to establish a fleet program to sell Toyota and Lexus vehicles to Uber, develop in-car apps to support Uber drivers and share knowledge to accelerate their research process, according to the statement.
Toyota Financial Services will also offer a flexible lease term based on drivers’ needs, the statement said.
Shigeki Tomoyama, senior managing officer of Toyota Motor Corp. and president of Toyota’s Connected Co., one of Toyota Motor’s new in-house companies, said that ride-sharing has “huge potential in terms of shaping the future of mobility.”
“Through this collaboration with Uber, we would like to explore new ways of delivering secure, convenient and attractive mobility services to customers,” he said in the statement.
Toyota isn’t the only major automaker to initiate business with a ride-sharing company.
Also on Tuesday, Volkswagen announced it had invested $300 million in ride-hailing company Gett. The company, headquartered in Tel Aviv, is one of the leading providers in Europe’s ride-hailing market. Gett is available in more than 60 cities worldwide, including London, Moscow and New York, Volkswagen said in a statement.
In January, General Motors invested $500 million in Lyft, Uber’s rival. GM President Dan Ammann also sits on Lyft’s board. GM leases vehicles to Lyft drivers in Chicago and plans to expand the program.
Ballinger, when asked by Automotive News earlier this month whether Toyota was considering a ride-sharing partnership, said: “I think every OEM is looking at partnerships because the world is changing quickly and there’s lots of new business models to explore, lots of new things that OEMs want to pilot and lots of good ideas that are coming from a lot of nontraditional players.”
Bloomberg contributed to this report.