Car Sharing Catches On as Zipcar Sells to Avis

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The New York Times
Thursday, January 03, 2013

Car Sharing Catches On as Zipcar Sells to Avis

By ANDREW MARTIN

Last year, Lane Becker and his wife, Courtney Skott, plotted out the costs of owning a car versus renting one through Zipcar, the popular car-sharing service.

They ultimately decided to give away their car. Mr. Becker, who is 39 and lives in San Francisco, said he had few regrets, despite some difficulty securing a Zipcar on weekends, when he competes with other customers.

"It's a lot easier to rent than to own in a city these days, and Zipcar is an easy way to do it," he said.

But on Wednesday, Avis Budget Group, the car rental conglomerate, announced that it was buying Zipcar for about $500 million. And that has Mr. Becker and some other "Zipsters," as Zipcar customers are known, worried that the company's communal cachet could be tarnished by a corporate behemoth.

"Please don't let them screw it up," Mr. Becker said.

For Zipcar, based in Cambridge, Mass., the deal represents perhaps an inevitable evolution for a company that has been more successful as a collectivist concept than as a profit-making venture (though it announced in November that it would post an annual profit for the first time).

Zipcar, which will operate as a subsidiary of Avis, should realize significant savings on things like vehicle purchases and insurance, while being able to tap Avis's fleet to meet demand on weekends, when it is often short of cars.

For Avis, the purchase represents a new direction in a fiercely competitive car rental market, and an about-face for Ronald L. Nelson, the company's chairman and chief executive, who had resisted entering the car-sharing segment.

"I've been somewhat dismissive of car sharing in the past," Mr. Nelson said Wednesday morning in a phone call with analysts. He said he had come to the realization that car sharing could complement Avis's more traditional car rental business and help it unlock new business opportunities abroad and with younger consumers. Avis's rivals, Hertz Global and Enterprise Rent-A-Car, already offer hourly rental services that compete with Zipcar.

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