Zipcar: Applying Existing Concepts to New Markets

Zipcar is a blossoming company in the new market for shared car ownership.  The concept of Zipcar is fairly simple; a person living in an urban area who doesn’t want to deal with all of the costs and discomforts of owning a car in a big city can become a member of Zipcar and drive a car hassle free whenever the member needs to drive somewhere.  The annual fee to become a member of Zipcar is $60 and cars can be rented by the hour at very reasonable rates.  The service currently requires their members to return the shared vehicles to the original location of pickup, which may be out of the way or inconvenient to some members.  However, Zipcar is about to launch a new segment that allows drivers to reserve a car for a one way trip to a location and insure that the driver will have a parking spot to leave the car.  Zipcar is seen as a substitute to car ownership in urban areas and is doing so well that other similar ventures are entering the market.

 

The ability of Zipcar to significantly dip into the market capitalization of large auto manufacturers like Ford and GM is not viscerally threatening.  However, large auto manufacturers are not simply ignoring the rising industry for car share services.  In fact, the auto giant Daimler is involved in the car sharing industry through its subsidiary Car2Go, and I believe the market may see more subsidiaries of large manufacturers entering.  I am not alone in thinking that the car-sharing business will continue to grow and gain popularity.  The article states that Frost and Sullivan “a US-based market research and growth strategy firm expects one-way car-sharing to gain in popularity. “  The company predicts that by 2015 around 3 million Americans will belong to some sort of car-sharing business.  Further, the projections by Frost and Sullivan for 2020 are of a car-sharing industry comprised of roughly 8.4 million American members.  The car-sharing industry is relatively new, and for this reason it is hard to predict what the future has in store.  However, the appearance of large firms in the market either through ownership (Daimler) or through partnership (Honda) seems to bode well.

 

http://www.bostonglobe.com/business/2014/05/01/zipcar-test-one-way-car-sharing/5WkDIkVEwtK4B2m2CF6NhK/story.html

4 comments to Zipcar: Applying Existing Concepts to New Markets

  • mayolj16

    I think that the shared car system will be the predecessor of the automated car/taxi. If this business continues to expand it could be the end of taxi drivers (assuming that the automated car system makes it to the market)

  • heardd16

    I wonder if Zipcar will somehow affect the growth of company Uber. I think Zipcar and Uber are in some ways substitutes and will compete, although Zipcar will cater to the more independent individual who for whatever reason does not want to own a car.

  • Jier Qiu

    I wrote a blogpost on a very similar concept: Car2Go. It is also a car-sharing company, except for it does not require people to return their cars to the original place. Instead, people can park on the street almost anywhere. This saves a lot of trouble for returning cars if consumers are doing a one-way trip. However, unlike Zipcar, Car2Go has only 1 option of rental cars: Smart Fortwo.

  • Zachary Durkin

    This seems very much like a possible example of the “Tragedy of the Commons”. People won’t feel any personal ownership towards the cars and won’t attempt to keep them clean or be responsible with the car. It may gain some traction, but I still feel like a lot of people would rather own their own car than have to worry about what the last guy did with it.

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