Uber knowingly rented out faulty cars, WSJ says; firm says problem fixed

SINGAPORE (Reuters) - Uber Technologies Inc [UBER.UL] knowingly rented its drivers defective cars at risk of catching fire, the Wall Street Journal reported on Friday, and the ride-hailing firm said it moved to fix the problem after one of the vehicles suffered a blaze.

A Honda Vezel is seen in Singapore August 4, 2017. REUTERS/Thomas White

The Journal cited internal emails and documents showing Uber's Singapore unit bought more than 1,000 Vezel sport-utility vehicles that maker Honda Motor Co Ltd 7267.T had recalled due to an electrical fault.

It reported the Singapore management was aware of the recall, and that the cars Uber had bought and rented out had not been repaired. The Journal also said management pressed the car dealer for repairs whilst renting out the vehicles.

“As soon as we learned of a Honda Vezel from the Lion City Rental fleet catching fire, we took swift action to fix the problem, in close coordination with Singapore’s Land Transport Authority,” Uber said in a statement.

The Journal reported the vehicle caught fire in January.

A spokesperson for Singapore’s Land Transport Authority (LTA) said in a statement that it had been “closely monitoring the recall and rectification progress for affected Honda Vezels”.

The LTA spokesperson said its records, based on latest information provided by importers and dealers, showed that among the Honda Vezels owned by Lion City Rental Pte Ltd (LCR), 9 percent had been rectified.

“LTA is working with LCR and importers to update this figure and ensure all vehicles are rectified,” the LTA spokesperson said.

An Uber spokesman in Singapore declined to elaborate on whether management knowingly rented out defective vehicles, directing Reuters to the company statement. The spokesman said all vehicles had now been repaired.

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“We acknowledge we could have done more - and we have done so,” Uber said in its statement. It said it had hired three experts “whose sole job is to ensure we are fully responsive to safety recalls.”

The Journal reported that Uber’s lawyers had assessed potential legal liabilities including possibly violating driver contracts.

“There is clearly a large safety/responsible actor/brand integrity/PR issue,” for Uber, an internal report read, according to the Journal.

Uber, which has pulled out of massive markets China and Russia, used Singapore as a springboard to grow in populous Southeast Asia.

The region is dominated by Grab, which says it has a 95 percent market share in third-party taxi-hailing and 71 percent in private vehicle hailing. The local incumbent said last month said had raised $2.5 billion to fund further growth.

Grab said on Friday its drivers do not use the Vezel model that was subject to recall.

“(This incident) will receive some attention and may dissuade some people from using Uber, but I don’t see it as having a major impact,” said Dane Anderson, a vice president at researcher Forrester.

“The government is very pragmatic and has been friendly to services like this and to business in general. I think it will continue to do what it has always done, which is continue to take a balanced, measured, pragmatic view,” Anderson said.

The Journal report is the latest blow to Uber in Asia. Authorities in places such as Hong Kong, Japan, South Korea and Taiwan have questioned the legality of its apps, which connect private car owners with fare-paying passengers, pitting them against licensed taxi drivers. The firm has had to suspend operations on several occasions, as in Macau last month.

At home, Uber is the subject of a federal inquiry into software that helped drivers avoid authorities in areas within which it did not have official permission to operate. It is also involved in an intellectual property lawsuit filed by the self-driving car unit of Google parent Alphabet Inc GOOG.O.

Reporting by Aradhana Aravindan in SINGAPORE and Alexandria Sage in SAN FRANSISCO; Addtional reporting by Masayuki Kitano; Editing by Stephen Coates and Christopher Cushing