MarketLine Blog

Car sharing industry – beginning of the end?

Zipcar, Inc. operates a car sharing network, providing self-service vehicles, conveniently located in reserved parking spaces, by the hour or by the day. The company offers its solutions to individuals, universities, businesses, and government agencies. It is present in North America and Europe.

Zipcar’s way of doing business is particularly appealing to young city dwellers, who do not own their own cars, but walk, bike and use public transportation instead, most of the time. They usually like the cool cars  that Zipcar provides, such as Mini Coopers, or Toyota Prius, They also value the convenience of picking cars up in their neighborhood and the very idea of “sharing” cars with similar people.

Pioneering the car sharing concept, Zipcar entered the market in its very early stages and rapidly expanded, taking the path of mergers, acquisitions and strategic partnerships, to become the global leader. However, despite its strong membership and revenue growth, it failed to return profits. In March 14, 2013, Zipcar, Inc. was acquired by Avis Budget Group, Inc.

Zipcar’s mixed success raises questions about the future of car sharing. Following a flurry of M&A activity, the line between “car sharing” and “car rental” markets is becoming more and more blurry. Despite the antitrust laws in place, an oligopoly is emerging. While authorities are watching, a select few international incumbents are crushing smaller competitors with new business models that could prove a threat to their revenues and bring a disruptive innovation to the traditional car rental business.

For more, see MarketLine’s case study: Zipcar – world’s largest car sharing network.

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