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When the Alternative Goes Mainstream

The Avis offer for Zipcar was inevitable. But is it good?

January 2, 2013

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With Avis Budget Group’s pending acquisition of Zipcar, traditional car rental converges with car sharing in a major way. It was inevitable. Avis, one of the largest of the global car rental companies, has the financial might to make the purchase; it has fleet buying and selling power; it has a presence in so many more markets that Zipcar wants to get into.

It was inevitable, but is it good?

Car sharing spent most of its young life as an alternative transportation option, embraced by young progressives on college campuses and urban centers who never adopted their parents’ American dream of owning a car. Instead, they espouse the environmentally correct New Mobility Agenda, in which you fit the type of trip to the transportation – car, plane, rail, bus, subway, taxi and bicycle or on foot.

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Car sharing was theirs. Or at least Zipcar’s marketing would tell you so, with its online photos of smiling hipsters in action and unique marketing stunts like pitching tents on street corners with actors strumming guitars.

So how will that audience take to “the man” stealing one of their own? You don’t want to mess with something unique, such as Zipcar’s carefully built culture. Traditional companies have a way of screwing things up when they get into the young and the new. (Look at News Corp’s acquisition of MySpace, though MySpace was already a sinking ship anyway.) What if Avis tries to offer Zipsters points in its loyalty program or tries to sell additional liability coverage? What if the marketing turns more traditional, or worse, tries to be hip but doesn’t get it? Would the crowd abandon the room?

The answer speaks to the direction of car sharing itself. First, I’m not too sure that Zipcar’s users in reality were predominantly the enlightened thought police to begin with. They may be mostly on college campuses or in areas with population concentration, but they are also working families, school teachers, shop owners, senior citizens and people who simply can’t afford a car. They were presented with a convenient way to travel, and it works for them. A recent research study from Northeastern University finds that the most important factors for consumers using car sharing is vehicle variety, availability, location and rates. These factors should only expand after the acquisition.

Avis would face a rebellion if it takes away services or raises rates exorbitantly, but let’s face it, that would be stupid. There are market forces that will take care of that. And if they left, what would they do – go to the competition, Hertz On Demand?

Second, the future of car sharing is toward the mainstream. For the model to grow, it needs to break away from the urban core. This is happening. Zipcar is moving into corporate and government car sharing. Car sharing is showing up in apartment complexes. One-way car sharing offers opportunities for trips from the airport to the city center and for trips usually served by a taxi.

Zipcar is not a sinking ship and car sharing certainly isn’t a fad on its way out. If Avis screws up the marketing, who cares? Heck, the unhip started to listen to the Rolling Stones at some point, and Snoop Dog now does ads for Hot Pockets. Today, car sharing is no longer the pet of the young urbanite hipster, it already is the mainstream.

Yes, the consolidation of the traditional industries with the companies with the new ideas is inevitable. A better way to look at it is this: the fact that car sharing is bringing its ideas and technology into traditional car rental is one of the best things to happen to traditional car rental in years.

Comments

  1. 1. Dave B [ January 02, 2013 @ 11:09AM ]

    Well said! There is much nonsense being said about this acquisition in mainstream media. I think Avis' move also speaks volumes about the state of the car rental industry, as well.

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Author Bio

Chris Brown

Executive Editor

Chris Brown is the executive editor of Business Fleet Magazine and Auto Rental News. Through these publications, online newsletters, trade events and associations, Chris covers all aspects of the fleet world, including fleet management, manufacturer fleet activities, the fleet leasing industry, vehicle remarketing, rental industry news, car rental taxation and legislation.

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