Popular short-term car rental service Zipcar sells out to rental giant Avis today, in a $500 million deal. Zipcar, founded in 2000, claims a customer base of over 760,000 users and a fleet of over 11,000 vehicles available for use in the United States, Canada, the UK, Austria and Spain. Unlike traditional rental car services, Zipcar users (often referred to as Zipsters) pay a one time sign-up fee, an annual membership fee, and a reservation fee each time they wish to borrow a vehicle. An access card automatically unlocks the door of any available Zipcar, where the keys are waiting inside. Zipcar offers a free application for iPhone or Android users to locate the nearest Zipcar, honk its horn or unlock its doors remotely. You can rent Zipcars to use in as little as one-hour increments, with users only paying for the time they use the cars. A reservation includes driver’s insurance and gasoline (as well as up to a $15 reimbursement for such things as windshield wiper fluid or car washes).
Chief executive of Avis, Ronald Nelson, tells the Associated Press that, “We see car sharing as highly complementary to traditional car rental, with rapid growth potential and representing a scalable opportunity for us as a combined company.”
Services like Zipcar, or competing hourly car rental services offered by Enterprise and Hertz, tend to attract younger, more urban customers who often use the rental vehicles as alternatives to owning their own vehicles.
Although Zipcar stocks are up nearly 50 percent after today’s announcement, some Zipcar customers express concerns the service will suffer under Avis ownership. Zipcar is known for offering a wide variety of vehicle options, including BMW, Volvo, Mini Cooper, and an assortment of pickup trucks and minivans. Some users fear the Avis buyout will result in those choices vanishing — replaced with nondescript Detroit made cars or Asian-manufactured economy cars.
However, if the buyout pans out in the long run, I think it’s safe to chalk this up as yet another win for a web-based startup. It may have taken Zipcar over a decade, but it succeeded in disrupting an established market and turning an idea into cash.
Comments are closed.