9.1.2013 Avis Budget aquires Zipcar car club

Zipcar, the world's biggest car club, has been bought by Avis Budget car hire firm for $500 million (around £310 million).

Avis paid almost 50% more per share of Zipcar than the shares were worth at the end of 2012, reflecting the global and rapidly growing car sharing market.

Zipcar has adopted a different business model to Avis, one considered to be a more modern way of 'hiring' a vehicle. As with other car clubs, Zipcar's 767,000 members pay an annual fee and then are charged additionally per hour of vehicle use. Avis customers however do not require annual registration, but (as with any car hire company) simply rent a vehicle from a central location per day.

Some analysts suggest that Zipcar's 'car sharing' model may one day overtake the more conventional 'car rental' model in terms of popularity. Zipcar has been growing rapidly over the last year, and industry analysts see this trend set to continue. However, Avis may have to much to learn about how Zipcar operates in order to integrate its operations and continue the company's success.

When announcing the deal, Ronald Nelson, chairman and chief executive of Avis Budget Group said, "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."

Avis hopes to expand the Zipcar approach, by placing more cars in more locations. They are also likely to adopt some of the Zipcar technology across the existing group, such as using a smart-card to access a vehicle rather than keys.

To add to the competition, a third business model is also emerging as demonstrated by Whipcar who have exploited peer-to-peer marketplaces, where they help existing car owners to make money by renting their cars out for varying amounts of time to those who wish to hire a vehicle.

It appears that public acceptance of car new car sharing models such as car clubs is becoming more open, and new car sharing models such as those of Zipcar and Whipcar are poised to become more popular in the UK and elsewhere, more so now that the economic downturn looks set to continue for some time.

BBC, Whipcar