Car sharing, which allows drivers to get a vehicle for an hour or two, as well as for short trips, has become a popular new alternative to leasing vehicles, particularly in big cities as well as on college campuses where it isn’t always conducive to maintain them on a full-time basis. In fact, this segment of the market has seen major growth in many areas, while traditional car renting has gone down in the current slow-growth economy.
As a result, Avis has announced that it will be expanding its operations by buying car-sharing service Zipcar for $491.2 million.
Zipcar, founded in 2000, now boasts more than 760,000 members. To join members pay a $25 application few, and $50 a year. General rates run from $7.50 per hour and include gas, insurance and 180 miles per day.
“I have come to realize that car sharing, particularly on the scale Zipcar has achieved and will achieve, is complementary to our traditional business,” stated Avis CEO Ron Nelson in a conference after the deal was announced. He also noted that the acquisition will enable Avis to be more competitive with rivals Hertz and Enterprise, which already have their own small car sharing services. In turn, having access to Avis’s fleet of rental cars will help Zipcar meet high demands for vehicles on weekends.