Car-sharing’s value affirmed

By From page A6 | January 09, 2013

In one of his many recent rants about Zipcar, Bob Dunning noted the irony in its recent acquisition by Avis. There certainly is irony from his perspective. Dunning has long maintained that Zipcar offers a similar though more expensive product relative to traditional rental agencies such as Avis (his favored large corporation of comparison), and is only able to stay afloat given the city’s beneficence.

Dunning is particularly dismissive of the new-fangled term “car-sharing,” asserting that any car for hire service is renting pure and simple. By this standard, leasing is also renting and, hell, we might as well include taxi hire under same rubric, then no one will know what anyone is talking about when they say they are renting a car.

But Dunning plays to his audience, and those of us not compelled to play the curmudgeon are free to recognize that Zipcar offers what no other rental company in town has up to now: online rental of a particular make and model, at multiple locations, for a fixed fee — and most importantly — 24-hour electronic card access.

This service fills a niche for those who frequently require a car for less than a full day, just as leasing serves a longer-term function. If you agree with Dunning that this is the same service offered by traditional rental companies, then I strongly recommend that you do not do your own investing.

So, why did Avis not only buy Zipcar but at a price twice its outstanding share value? Well, if you agree with Dunning, the answer is clear — to kill a pesky competitor with an unfair advantage. If so, I expect that Avis will quickly liquidate Zipcar’s fleet and return to business as usual. I suspect, however, that Avis’ management had another reason — to remain competitive with other rental companies such as Hertz that already have adopted the disruptive technology known, for better or worse, as car-sharing.

Kevin O’Connor


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