The technology may be all about sharing, but the competition is downright cutthroat.
That’s the status of a U.S. car rental industry that’s become highly concentrated and newly focused on the concept of collaborative consumption.
Since March, Enterprise, Hertz and Avis Budget have all made acquisitions or product launches that move away from the traditional model of renting cars to newer, technology-enabled forms of sharing.
Most recently, Enterprise, which controls almost half the approximately $24 billion U.S. car rental market, this month acquired Zimride, which was founded in 2007 and, with more than 350,000 users, bills itself as the country’s largest ride-sharing program.
On Zimride, which has driven its growth through college and corporate networks, people can buy rides from private drivers from Los Angeles to San Francisco, or from Boston to New York for $30 to $40 a seat, with Zimride processing payments through PayPal and taking a cut.
Meanwhile, Hertz late last month debuted its Hertz 24/7 option, modeled on Zipcar. It offers keyless entry to its neighborhood-parked vehicles for hourly rentals and permits vehicles to be dropped off at a different place from their pickup location.
At launch, Hertz equipped about 35,000 vehicles parked at about 1,800 locations with the onboard technology required for the service and said 500,000 vehicles will be rentable through Hertz 24/7 by 2016.
That launch followed Avis Budget’s $500 million acquisition of Zipcar in March.
The recent developments reflect an extremely consolidated car rental industry in which the largest three companies are looking to less traditional consumption models to gain a possible edge.
Following Hertz’s $2.6 billion buyout of Dollar Thrifty last year, about 95% of the U.S. car rental market is controlled by Enterprise, Hertz and Avis Budget, according to trade publication Auto Rental News.
“It’s actually less about technology and more about a company expanding the reach of its brand into evolving markets,” said Neil Abrams, president of Abrams Consulting Group and a former Hertz executive. “This is where this industry is going.”
This year also marked the launch of peer-to-peer car-share startups FlightCar and Hubber, both of which enable car owners to rent out their cars to incoming travelers while they’re away.
Hubber serves Los Angeles Airport, while FlightCar has operations at San Francisco and Boston. The companies expect to start going head to head in Los Angeles and San Francisco later this year.
Additionally, Silvercar also launched this year with its fleet of Audi A4 sedans that are rented solely through smartphone apps. The company, which has no reservation desks, operates out of Austin, Dallas Love Field and Houston Hobby airports.
Regardless of whether these start-ups thrive or become acquisition targets and, ultimately, divisions of the largest three car rental companies, it’s clear that the industry is moving beyond mere car rentals and evolving into the provision of what Enterprise calls “a total transportation solution” that is collaborative yet competitive.
“It’s about building cost efficiencies into the technology,” Abrams said. “If those weren’t there, the technological advancements and development would be less aggressive. It’s not all that altruistic.”
Follow Danny King on Twitter @dktravelweekly.