A decade ago, Cambridge, Mass.-based Zipcar pioneered the concept of car sharing. Now it's just a question of who's going to share this rapidly growing segment of the automobile rental business.
While customers of the relatively nascent industry are predominantly city-dwelling professionals looking to eliminate the cost of car ownership or students with few parking options at landlocked campuses, analysts expect much of the forecasted growth in car-sharing revenue to come from corporations that are either looking to save on travel expenses or cut local fleet costs.
"For corporate America, it's an alternative to black-car services and taxis," said Neil Abrams, whose Abrams Consulting Group this year launched an advisory unit on car sharing. "If I rent a midsize car in New York for a full day, it's $60 plus. If I take a car-share vehicle and pay for only what I used, it could be half that."
Car-sharing services like Zipcar charge an annual membership fee of about $50, which gives customers the opportunity to make an online reservation, swipe their membership card over a car-window sensor for access and drive a car for between $8 and $15 an hour.
While Zipcar, which merged with Seattle-based Flexcar two years ago, has been around since 1999, car sharing still represents a small slice of the overall vehicle renting pie.
Zipcar is estimating its 2009 revenue at about $130 million; in comparison, Hertz Global Holdings, the largest publicly traded U.S. car rental company, generated rental revenue of $6.86 billion last year.
Still, Zipcar's membership base of 325,000 has almost tripled in the past two years, while its 6,500-vehicle fleet of Toyota Priuses, Mini Coopers and other fuel-efficient cars has almost doubled.
Mainstream companies aren't seeing that kind of growth with the conventional product.
The combined third-quarter sales of Hertz, Avis Budget Group and Dollar Thrifty Automotive Group fell about 14% from two years earlier, while their collective fleet size is down 18% from the third quarter of 2007.
Zipcar, in a June 2009 study, estimated the potential global car-sharing market at 37 million members and $10 billion in sales, which is about a third of the global car rental market today.
Such potential growth has pulled both Hertz and Enterprise Rent-A-Car into the car-sharing market.
Enterprise, which ran a pilot car-sharing program in 2007, started its WeCar unit last year. Enterprise spokeswoman Lisa Martini characterized WeCar as an "environmentally friendly transportation solution to business customers looking to enhance their fleet management operations and sustainability initiatives."
In addition to Enterprise's St. Louis home base, WeCar has expanded operations as far west as California and as far southeast as Florida.
Meanwhile, Connect by Hertz, which launched its car-sharing service in New York, London and Paris late last year, has deployed more than 400 cars in Manhattan and includes Marriott International among its corporate customers. Neither Hertz, which now operates Connect by Hertz out of 18 U.S. cities and colleges, nor Enterprise discloses sales estimates of their car-sharing divisions.
Zipcar spokesman John Williams said the company's service was more of an alternative to car ownership than car rentals.
And both Williams and Abrams said that as the user base grows and ages, the idea of a self-service car rented out by the hour may become progressively more acceptable, whether the customer is near home or on business.
"This is a generation that's grown up getting music by the song" as opposed to an album or CD, Williams said. "Having a car by the hour isn't that foreign to them."