Tag Archives: ZipCar

Avis, Zipcar, and the spectrum of car-sharing services

Old Avis ad in Australia - CC image from Bidgee

Last week’s big transportation news: Avis purchased Zipcar for a cool $500 million.  Reaction to the sale is all over the map, with some analysts praising the move and some hating it.

On the ‘pro’ side of the ledger – Felix Salmon:

The acquisition solves a number of problems with the Zipcar model. For one thing, it gives Zipcar easy access to the one thing it needs more than anything else: money. The car-rental business is at heart a financing business: you need to be able to finance the acquisition of new cars, efficiently dispose of them once they get too old and too used, and generally make profits by juggling enormous cashflows both coming in and going out. When you’re a small and risky company like Zipcar, that kind of fleet and cash management is much harder than when you’re a giant like Avis Budget.

The other big problem that Zipcar had was that it couldn’t meet demand at weekends: the company’s slogan is “wheels when you want them”, but in practice the cars tended to be sold out at precisely the times that members really wanted them. By merging with Avis, Zipcar gets to offer its members Avis cars when dedicated Zipcars are unavailable

On the ‘con’ side, pretty much anyone who hates the standard car-renting process – Sarah Lacy:

That’s how much I loathe Avis. As far as I’m concerned they only “try harder” to piss me off. And thanks to a tightly controlled oligopoly, the rest of the rental car world isn’t much better. There’s little innovation or even need to innovate, when a few players control the entire market.

People hate renting cars – myself included.  The process stinks all around.  Pricing is anything but transparent or simple; even with a reservation you must wait in line; employees are constantly pushing insurance packages of dubious value; you constantly feel like you’re about to get nickel and dimed for a small scratch or a gas tank that’s not quite full – the entire process feels kinda sleazy.

With that in mind, it’s easy to understand the angst of some users (see the concerns voiced in Ben Kabak’s post).  From the ‘man on the street’ in this Dealbook summary of the sale: “Please don’t let them screw it up.”

So far, Zipcar is looking to reassure folks they won’t lose that innovative spirit, with the CEO expecting Zipcar to remain a standalone subsidiary, also while announcing plans to offer memberships to the service without the annual fee.

For me, however, Zipcar use is way down.  My personal membership expired several years ago.  I maintain an account so I can be a member of my employer’s business membership (and will use that service for business trips that require a car), but my personal use is almost non-existent.  Conversely, I’ve been using Car2go‘s point-to-point carsharing far more frequently in DC (and I’m not the only one).

Car2go’s service isn’t an exact analogue for Zipcar, however.  If you think of carsharing services as a spectrum, between traditional car rentals on one hand (longer terms, frequently used during travel) and short trips within the city on the other (as Car2go’s trips have more in common with taxi rides for DC users than car rentals), there is room for a whole host of products and services, each tailored for a different segment of the travel market.

The spectrum of car-based transport would look something like this:

  • Car ownership
  • Traditional car rental (home space; by the day)
  • Zipcar-type car-sharing (home space; by the hour)
  • Car2go-type car-sharing (point-to-point; by the minute)
  • For-hire service (taxi, sedan services, etc; by the minute/mile)

Note: there are lots of other models out there, including ones where car owners can offer up their personal vehicle for rentals when they are not using it – sort of an Airbnb for cars.

Zipcar’s current model (where every car rental must begin and end at the same ‘home’ parking space) is more similar to the traditional rental car model, just dispersed to locations around the city, and with the details of the rental handled online and with standardized pricing.   Lydia DePillis notes this might not be the cutting edge in carsharing services anymore, but offering a wide variety of useful vehicle types (including the Zipvan) is valuable.

The next evolution for a service like Zipcar would be to offer point-to-point car sharing (rumors hint that Zipcar is interested in this market as well). Fears of Avis turning Zipcar into something more Avis-like are valid, but the opposite could be just as valuable – airport car rentals with the ease of a Zipcar online reservation.   Others are working on this very concept as I type.

Even without tailoring a business model to this market, there’s opportunity for disrupting the standard airport-car-rental-while-traveling model. On a recent trip from DC to San Diego, I found myself stuck at my downtown hotel, wanting to get to the beach without the burden of a large taxi fare – an Car2go’s all-electric San Diego fleet (and a membership that works across the country) was there to serve.

No need to deal with the hassle of renting car – my hotel had a free shuttle from the airport.  On trips like this (where the beach trip is the only one I wanted a car for), why bother?  Perhaps this is a place where a company like Avis can learn from car-sharing.

Linkages

Image from Rakka

Image from Rakka

Car Sharing

Yonah Freemark and Ryan Avent have some discussion on the urban benefits of car sharing services.

Yonah:

The end result, at least theoretically: fewer cars on the road, more efficient use of each automobile, and fewer parking spaces needed. It has proven a cheaper alternative to taxis and car rentals and has been quickly adopted.

The problem, of course, is that many of the people using car sharing programs once weren’t using any cars at all, meaning that the easy access to vehicle actually means an increase in overall car use. Zipcar’s campaign earlier this year to convince New York City pedestrians that they could be getting around more quickly in an automobile suggests that the service’s best market is among people who are currently walking, biking, or taking transit to get to work. Should cities be encouraging car-share programs if the end result is to convince people who don’t use automobiles today to use them in the future?

Ryan:

In cities where a carless lifestyle is somewhat more marginal (like Washington) the existence of a zipcar service is a huge comfort to those thinking about giving up their automobiles.

And I don’t think there is anything wrong with acknowledging the fact that for some things, the availability of an automobile is hugely advantageous. Carrying around big or bulky loads on foot is hard and unpleasant. The ability to use a car for, say, a trip to the hardware store or to the market in preparation for a big dinner party significantly increases the convenience of city life.

There’s nothing wrong with cars, per se.  My personal ZipCar use in DC is quite limited for personal trips.  I don’t really use it much as a replacement for walking and transit errand trips – my uses are for trips that require a car, regardless.  Another case where ZipCar is quite useful has been for business trips.  Previously, working in downtown DC but with frequent client meetings in non-transit accessible areas of Northern VA, ZipCar enabled me to take transit into the office, grab a car within a very short walk of the office, use the car for a meeting, and return to the office without worrying about parking.

One instance actually involved using ZipCar for a longer, overnight business trip up to suburban New York.  Given the ability to pick the car up right at the office and drop it off the same, as well as the inclusion of gas, the rates for the trip were similar to renting a car from a ‘regular’ outlet.

To me, there’s no doubt that car sharing presents a net positive.  I predicate that notion on the idea that car trips are not inherently bad.

Hill East, baby.

DCmud offers thoughts on living in Hill East, my ‘hood.  It’s a thorough description of the area, including the neighboring retail options in Eastern Market.  Unfortunately, the comments on the piece devolve into some back and forth, denigrating condo-living gentrifiers and other newcomers to the area.  It’s unfortunate that residents don’t see any role for different housing options in their neighborhood, as these new options would certainly make the area stronger.  It’s also not the first time these sentiments have arisen in the area.

Transit and Land Use

There have also been some good posts on the Corridor Cities Transitway – The transport politic offers an explanation of the possible alternatives, as does BeyondDC.   The ‘better’ routes (at least in terms of serving potential users) are undoubtedly more snake-like, due to the locations of the various transit nodes.

Jarrett Walker notes how the land use in the area puts transit in a poor position – either option isn’t exactly how you’d like to draw it up if given a blank slate.

As a result, Maryland now has to choose between a direct yellow line that misses key destinations and a blue line that serves them but is maddeningly circuitous, especially compared to the freeway that this line would compete with.

There is no clearer example of this basic principle:  Public transit’s usefulness is determined by land use planning more than by transit planning. Once you’ve arranged your major land use nodes to form a squiggle, you’ve pretty much prohibited efficient public transit.

Indeed.  Once the basic patterns are put in place, there’s only so much that fixed guideway transit can do.  There’s not a universal solution for simply adding rail lines to make everything better.