Uber has a new rent-to-own scheme in SA. Here’s how the numbers stack up
- Uber and Moove have partnered in making car ownership possible for driver-partners.
- The company is offering drivers brand new Toyota Agyas at the cost of R1,950 every week.
- But, according to installment costs derived from Toyota’s online calculator, the cost is significantly lower than Moove’s prices.
- However, Moove’s prices include insurance and maintenance costs.
- For more stories, go to www.BusinessInsider.co.za.
* This article has been updated below.
E-hailing company Uber has launched a partnership with car ownership company Moove that allows drivers on its platform to use a rent-to-own scheme to buy cars.
Moove offers the same service in Nigeria and Ghana, which is touted as a channel for Uber drivers to access "compact and cost-efficient vehicles" at "affordable interest rates." The service was launched first in Nigeria last year and in Ghana earlier this year.
But in South Africa, the numbers are not great for drivers.
Last week Uber launched its low cost Uber Go product in Johannesburg and announced that its drivers will have access to brand new Toyota Agyas, which they'll be able to rent for R1,599 a week from Moove. Alternatively they can go for the rent-to-own option at a cost of R1,950 a week or R7,800 a month; over a repayment period of 48 months.
At the end of the period, that would mean the driver pays a total amount of R374,400 – which is around R150,000 more than buying the car from Toyota.
That does come with insurance and maintenance, though.
According to Toyota’s online calculator, an interest rate of 9% would see a buyer pay R4,543 per month for the same vehicle, on a 48-month hire purchase, for a total purchase price of around R220,000. (Instalments can go as low as R3,310, over a 72-month term, but the interest total gets pretty high.)
That leaves drivers with an effective bill of R3,125 per month for maintenance and insurance.
It also buys simplicity, says Moove.
The company was not necessarily running a vehicle financing programme, but a vehicle solutions programme, Sinako Cetyiwe, Moove country manager said.
He said Moove offers and facilitates flexible leases to drivers using the Uber app, and allows drivers to own cars without carrying the burden of maintenance and insurance costs in their personal capacity.
"With the Moove Drive-to-Own product drivers have full comprehensive insurance for ride-hailing, monthly servicing and full maintenance, and 24/7 support all-inclusive in the R1,950 weekly fee with no deposit," Cetyiwe said.
He added that the offering was designed to give people who may not qualify for traditional financing an opportunity to own their business.
Not everyone agrees that it makes for a good deal
National e-hailing spokesperson Vhatuka Mbelengwa of the Public Transport Association, said even without insurance factored in, the repayment costs are excessive.
He said the rollout of a cheaper product, Uber Go, was reckless and said it would lead to violence among transport operators across the entire land-based transportation sector of South Africa.
UPDATE: Uber responds to Go criticism.
The following is Uber's response, in full, to the charge that launching Uber Go is "reckless".
"It is important to note the current economic climate - the economy is in crisis and jobs are being shed. Deloitte has published its latest State of the Consumer tracker, which measures consumer sentiment and spending patterns across 18 countries, including South Africa. The tracker shows that the last year of lockdown has notably impacted spending patterns, with the majority of local consumers planning to cut spending on more discretionary items over the coming month.
"If we don’t offer options for different consumer price points (and/or if prices are not adjusted according to the current economic trends), there could be no requests from riders - meaning less or no earnings for drivers.
"By introducing more cost effective vehicle options, along with offering vehicle options for different consumer pockets (Uber Go, Uber X, UberBlack) and bringing access to more cost-efficient vehicles for drivers to operate - we are doing everything we can to increase a drivers opportunity for business.
"This partnership is an investment in our and our drivers businesses in South Africa. It’s an increased investment in retaining our current riders and attracting those who may be new to Uber - to help ensure drivers can continue to get trips during these difficult times."
This article was additionally updated after publication to remove a reference to Moove as Uber's "fleet" partner. It is a vehicle solutions partner.
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