SINGAPORE: Ride-hailing company Uber bought and leased Honda Vezel cars to its drivers even though the model had been recalled due to a fire risk, a report by the Wall Street Journal (WSJ) on Thursday (Aug 3) claims.
The model was recalled by Honda in April 2016 for an electrical component that could overheat and catch fire.
WSJ said according to internal Uber emails and documents it reviewed and interviews with "people familiar with Uber's operations in the region", Uber managers in Singapore were aware of the Honda recall when they bought more than 1,000 defective Vezels and rented them to drivers without the needed repairs.
One of the Vezels caught fire in January this year. In response to Channel NewsAsia's queries, an Uber spokesperson said that as soon as the company learned of the incident, it "took swift action to fix the problem, in close coordination with Singapore's Land Transport Authority as well as technical experts".
The spokesperson added that it has introduced "robust protocols" and hired three in-house experts whose sole job is to ensure the company is fully responsive to safety recalls.
"Since the beginning of the year, we’ve proactively responded to six vehicle recalls and will continue to do so to protect the safety of everyone who uses Uber," the spokesperson said.
UBER CLAIMED CARS WERE IN "PERFECT CONDITION": WSJ
The WSJ report said the Singapore team of Uber calculated that it would be able to buy cars for 12 per cent less at small dealers than at authorised Honda dealers. These small dealers operate in the grey market where safety, service and legal contracts are difficult to enforce, the newspaper reported.
Uber assured drivers that the cars they rented were in "perfect running condition", according to a rental agreement from 2016 reviewed by the newspaper.
According to an internal document, the company had already bought some new Vezels when Honda issued a recall for fuel-powered models on Apr 4, 2016, advising owners to get them serviced as soon as possible.
An internal Uber report showed that two days later, Uber bought 100 Vezels from a Singapore-based dealer, Sunrita. Sunrita sent Uber notices of the recall on May 5, estimating it would replace the affected parts by August's end, according to documents seen by the WSJ.
The report alleged that over the following eight months, Uber bought thousands of cars from Sunrita and other dealers, including 1,065 additional new Vezels with the faulty electrical part.
Sunrita had not fixed the cars it sold Uber as of the end of August 2016, citing a shortage of replacement parts in emails to Uber. The company also periodically sent emails asking Sunrita to speed up that process but continued to rent faulty cars to drivers, emails show. An Uber spokeswoman was quoted as saying Sunrita had not provided replacement parts.
As of this January, all of Uber's still-defective Vezels were rented to drivers, the report said.
KEEPING CARS ON ROAD "FEELS LIKE LOW RISK": UBER EMAIL
According to WSJ, Uber's general manager of the Asia-Pacific region Michael Brown urged taking the defective cars off the road after a Vezel caught fire in January, writing that it would help avoid "unnecessary risk" in an email he sent to colleagues in Singapore on Jan 13.
However, Uber's Singapore general manager Warren Tseng replied in an email that the plan would cost the company about S$1.4 million in driver wages, rental fees and parking costs.
"Asking drivers to give up their keys with no suggested fix will send panic alarm bells to the mass market," he allegedly wrote in an email to Mr Brown and others.
Another Singapore manager, Chan Park, supported Mr Tseng, emailing that leaving cars on the road "feels like low risk", and: "The recall happened nine months ago," according to a review of the email.
Documents seen by the WSJ showed that Uber opted to leave the cars on the road and wait for replacement parts.
Meanwhile, Uber asked drivers to bring cars to repair shops to disable the faulty part, a stopgap measure managers described in emails as a "hack" not authorised by Honda, but one they believed would lower risk. Uber also planned to get its repair effort approved by Singapore authorities, the report claims.
The Uber spokesman was quoted as saying the company quickly notified affected drivers, asking them to disable the part and make appointments to replace it when parts became available.