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Avis buys Zipcar car sharing club

Avis has bought the car-sharing business Zipcar for US$ 500 million. SME’s should look at car-sharing as another route to flexible business car access.
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A model for the future? Avis Budget thinks it can achieve big synergies by combining with fast-growing car-sharing outfit Zipcar

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3 January 2013

Architects load an architectural model into a car
A model for the future? Avis Budget thinks it can achieve big synergies by combining with fast-growing car-sharing outfit Zipcar

CAR rental group Avis Budget is tapping into the fast-growing car-sharing business by acquiring the sector’s biggest player, Zipcar.

The purchase of Zipcar by Avis in the US$ 500 million deal is expected to be completed in spring 2013. Zipcar will operate as a subsidiary of Avis Budget Group, and retain the Zipcar brand.

Zipcar, already bulked up by its 2010 acquisition of rival car sharing outfit Streetcar in the UK, has over 760,000 members – or Zipsters, as it prefers to call them – and operates in twenty main cities in North America and Europe. It also has a fleet presence at 300 university campuses.

What is car-sharing?

Car-sharing offers a pay-as-you-go service with members ‘renting’ by the hour from a pre-agreed parking bay. Once you’ve joined, you can reserve a car by phone, hold your ‘Zipcard’ to the windscreen, and you’re in and away! At the end of the booked period the car is returned to the bay. All costs are covered –  including fuel and congestion charge.

Avis reckons it can squeeze synergies of between US$ 50 million and US$ 70 million a year from a combined Avis/Zipcar operation via measures such as improvements in fleet utilisation.

In particular, Avis has identified an opportunity to draw upon the main Avis Budget rental fleet in order to meet weekend peaks in car-sharing demand which Zipcar, with its smaller fleet, cannot currently meet.

Other savings are expected to come from improvements in areas such as fleet procurement, maintenance and disposal.

Ronald L Nelson, Avis Budget Group chairman and CEO said, “We see car sharing as highly complementary to traditional car rental. We expect to apply Avis Budget’s experience and efficiencies of fleet management with Zipcar’s proven, customer-friendly technology to accelerate the growth of the Zipcar brand and to provide more options for Zipsters in more places.”

Scott Griffith, chairman and CEO of Zipcar said “We will be well positioned to [give Zipcar members] more offers and additional services as well as an expanded network of locations. By combining Zipcar’s expertise in on-demand mobility with Avis Budget Group’s expertise in fleet operations, we will be able to accelerate the revolution we began in personal mobility.”

In 2010, Zipcar bought out a key rival car club in the UK, called Streetcar – see our news story Zipcar buys out Streetcar car club.

SMEs already use car rental as a means of managing changing demand for business cars and car-sharing adds to this flexibility. Zipcar currently operates in Bristol, Oxford, Cambridge, Maidstone and London.

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Ralph Morton

Ralph Morton

Ralph Morton is an award-winning journalist and the founder of Business Car Manager (now renamed Business Motoring). Ralph writes extensively about the car and van leasing industry as well as wider fleet and company car issues. A former editor of What Car?, Ralph is a vastly experienced writer and editor and has been writing about the automotive sector for over 35 years.

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