Zipcar-Avis Deal Marks Year of Car Sharing

The new year started off with a bang as car rental giant Avis Budget announced that it is acquiring Zipcar for $491 million in cash. This is likely the first of many big developments in a year that will see many privately owned cars taken off the streets and replaced by fewer shared rides. The rise of carshare programs in many urban centers, such as expansion in Paris's Autolib and new programs in Jiading, China and in Tel Aviv, Israel will make 2013 a historic year for vehicle sharing.

Zipcar has grown to more than 10,000 vehicles and 760,000 members in five countries, and Avis paid a nearly 50% premium to acquire the company. The acquisition places carsharing firmly in the mainstream of vehicle renting and will likely attract more corporations to participate in carshare programs.

One of the biggest advantages of carshares is that, in many cities, parking at metered spots is included. Companies such as car2go, which is now in 17 cities globally, have negotiated with municipalities to prepay the parking fees for their customers. This is convenient for drivers, especially in cities such as San Francisco that charge high rates for parking (including Sundays starting in 2013). Smaller cars, which often make up the majority of a carshare program, are easier to find spots for in crowded cities.

An increasing number of carshare fleets are incorporating EVs into their fleets to provide the ultimate green city driving experience, which will boost their market share.

There's No 'I' in Car

Automakers have a keen interest in understanding how this new attitude toward sharing rather than owning will affect overall vehicle demand. If owning a car loses some of its cachet, younger urban drivers may put off buying cars or sell their current vehicles. In places where carshare services are strategically placed to complement public transit, cars could come to be viewed as more of an encumbrance than a badge.

One study that attempted to answer some of the questions about vehicle ownership was completed in 2011 by the University of California Transportation Center (UCTC). The study found that car ownership dropped by nearly half in households that joined a carshare program, from 0.47 vehicles per household to 0.24 vehicles.

The study also said that 62% of carshare households had no vehicles before they joined the program, which is encouraging for automakers since this is new demand for their product, even if the owner is a fleet, not an individual.

As far as I can tell this study did not add in the number of cars in the car share programs to the average vehicles per household, which would shed more light on the true net difference in vehicles on the road in carshare cities.

Perhaps America's pro-car culture is permanently becoming more European in flavor, slanted toward what people most often need (a small car for occasional usage) versus what they think they might want some of the time (an SUV for the family). Pike Research will be keeping track of the growing carshare industry throughout 2013.