Photographer: Patrick T. Fallon/Bloomberg

Uber Drivers Get New-Car Smell at a Discount as Auto Sales Rise

  • Ride-share company says partners have saved $20 million
  • U.S. light-vehicle sales in February seen best since 2000

When Uber drivers started calling from more than 900 miles away, Ernesto DePiano knew he’d found a good market niche.

DePiano, a general sales manager at Kia of Stamford in Connecticut, said he and his team in 2014 crafted one of the first discount programs for Uber drivers and the idea was an instant hit. In the first year, the dealership sold about 30 cars -- equal to a month’s volume at the time -- to Uber drivers from as far away as Maine and Georgia through the program, which offered a $500 discount off any new or used model, DePiano said.

“Over here, they call me Steve Jobs,” DePiano joked. “If someone Googled ‘Uber driver discounts’ we would come up in a bunch of ads and we would get phone calls everywhere and sell to people everywhere -- our used car inventory, our new car inventory.”

Other dealerships and brands quickly caught on, and now even Uber Technologies Inc. has negotiated discounts with several non-luxury brands to help get drivers into qualifying cars. Uber said its arrangements with automakers have saved its drivers around the world $20 million. They have also expedited thousands of sales for automakers, which are enjoying the start of what’s projected to be another record year of light-vehicle sales in the U.S. February’s sales rate probably accelerated to 17.6 million, the average of 12 analyst estimates in a Bloomberg survey, the fastest pace for the month since 2000.

Brand Exposure

The discounts can be as narrow as a model or as broad as a make. Volkswagen AG’s namesake brand gives drivers $500 off any new or used VW, while General Motors Co.’s Chevrolet offers $3,600 off its 2016 Malibu sedan, according to Uber’s website. No luxury lines are on the San Francisco-based company’s list of vehicle discounts available in the U.S., which includes Chrysler, Ford, Hyundai, Nissan and Toyota.

Uber said the discounts have helped some people qualify as driver-partners. Renee Dearman of Atlanta started driving after she leased a 2016 Toyota Corolla with a $750 discount through Uber’s program, replacing a 1996 model that wasn’t acceptable, the company said.

When automakers report monthly sales on Tuesday, Ford Motor Co. may report a 13 percent increase in light-vehicle sales, the biggest among major automakers, according to the Bloomberg survey. Toyota Motor Corp. may show an 8.8 percent increase, the most among Asian automakers. Its Prius, Camry and Corolla cars were among the most popular vehicles in its Uber driver incentive program, said Amanda Rice, a Toyota spokeswoman.

Prius models are attractive vehicles for Uber drivers because of their roomy back seats and excellent fuel economy, particularly in stop-and-go driving, said Jessica Caldwell, an analyst for the vehicle-pricing research firm Edmunds.com, who often rides in the popular hybrids when she orders an Uber from her office in Santa Monica, California.

In addition to boosting sales, discounts for Uber drivers help introduce models to riders who could become buyers themselves, without damaging the brand like large sales of poorly equipped models to rental fleets, Caldwell said.

“It’s exposing these people to the brand and to the vehicles,” she said.

Stepping In

DePiano, the general sales manager at Kia of Stamford, agrees. Even though he’s lost Uber sales to other Kia dealers now that the automaker standardized the incentive, he’s excited that his brand will be more visible on the road.

Kia isn’t listed on Uber’s Web page, but it offers drivers as much as $2,000 off a 2016 model, said Brian Devenny, a Kia spokesman.

The advent of taxi-like ride-sharing companies such as closely held Uber and Lyft Inc., which is partly owned by GM, is changing how Americans get from place to place. And it’s forcing dealerships to adjust, said DePiano, who offers $500 in addition to the Kia discount.

“It’s a big business that’s really hopping,” he said.

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