• Jun 2, 2010
Automotive News reports that budding car share company Zipcar is looking to raise as much as $75 million in an Initial Public Offering (IPO). Zipcar, which rents cars by the hour mainly in 13 heavily populated urban areas around the globe, has reportedly never turned a profit in 10 years of business. The filing with the U.S. Securities and Exchange Commission shows that Zipcar intends to use the money to pay down debt and increase the company's fleet size.

The company did post first quarter revenue of $33 million, up 29 percent from 2009, yet its loss ballooned from $3 million in '09 to $5 million this year. In spite of the losses, Zipcar has continued to grow as the company acquired Streetcar Ltd in April to gain a foothold in London, England. Further expansion into Europe is planned in part due to an investment in Catalunya Carsharing, the largest car sharing company in Spain.

Analyst Jim Hall of 2953 Analytics says that Zipcar may have an opportunity to expand beyond the big cities, but the company will need to "learn vehicle usage cycles for different markets all over the country and all over the world." That expansion may mean Zipcar will need to overstock its inventory of vehicles, which could cut into future profits.

[Source: Automotive News sub. req. | Image: Rakka, CC2.0]


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    • 1 Second Ago
  • 15 Comments
      • 4 Years Ago
      If they can get investors to fund the next few years of losses this company could flourish with proper management. The ever-increasing government intrusions in the auto market will eventually lead to most vehicles beyond the means of even the middle class. So those wanting to pilot (fairly) new vehicles will result in more potential customers.

      Small cities may be a difficult expansion point though.
        • 4 Years Ago
        "The ever-increasing government intrusions in the auto market will eventually lead to most vehicles beyond the means of even the middle class"

        Heh, I see what you did there.
      • 4 Years Ago
      Great biz model...lose a little on every car but make it up in volume. IPO=Fail for those who buy into it.
      • 4 Years Ago

      Hourly rates from
      $7
      Daily rates from
      $88

      That's too expensive..I can rent a car for $45 a day + gas. They should charge a low hourly rate of say $3 + $ for each mile driven.
        • 4 Years Ago
        Agreed, I live in NYC without a car and thought it might be a great idea if I wanted to visit a friend a few hours from the city for the day but not that those prices. Unless you can get a group to fill up a whole car and split the cost, it's totally not worth it. I think they should have some older cars for cheaper instead. If you plan on using it more than once a month, you're better off buying a cheap used car instead.
      • 4 Years Ago
      I live in a small college town and zip car works great for students as well.
      • 4 Years Ago
      It's too bad Zipcar isn't doing well. I think it's a good idea for a lot of people who live in major metros. Most people who live inside major cities don't really need a car, and they don't even really need it for the whole day when they do. The service makes sense. I wonder why it hasn't caught on.
        • 4 Years Ago
        It has caught on but problem is knowledge of the brand and the reason why its good if not better than public transportation. I work within the Boston, MA area and I see ZipCars all the time. I think they need to partner up with business's to offer discounts maybe on using the cars when buying products from said business. I've seen the cars parked at Ikea and Target. Myself I'd be willing to rent a car for a hour or two if they had a small pick up truck at say Ikea to buy a bedroom set or entertainment center, but instead of $7hr it be $5-6hr.
        • 4 Years Ago
        "I wonder why it hasn't caught on"

        Probably because it's expensive. Typical rates "start" at $89 a day if it's Friday, Saturday or Sunday, not including the $25 app fee and the $50 annual fee. Assuming I only need that car once a month or so then calling Enterprise is cheaper, plus they deliver. And if you need the car more often, then outside of major downtown metro areas it's cheaper to just buy something.

        It's an interesting idea and I'm sure a few people like and use the service but there's a reason they lose a $5 million a year. 10 years without a profit? I wonder how much debt they've really racked up over the past decade.
        • 4 Years Ago
        It has caught on in Boston, NYC, San Francisco, or other places where folks are willing to think outside the box or where the cost of owning a car is high and public transit is good for regular trips. In places that require a car for day-to-day activities it doesn't make sense since the rental rates are pretty high ($8-10+/hr)
      • 4 Years Ago
      Is P.T. Barnum Equities underwriting this IPO?
      • 4 Years Ago
      Zipcar is based two blocks from me and they have a solid following here. Still, they need to focus on earning a profit where their market is saturated before expanding into untested waters.
        • 4 Years Ago
        You are correct. It's a good idea but if they can't develop a profitable business model than it's not destined to survive. The highly populated areas need more of these for people who need a bit more flexibility than mass transit.
        • 4 Years Ago
        Exactly. There is no point to grow just for growth's sake if it is done unprofitably. I can see that they want cash, but if Zipcar could show it is on the path to profitability the IPO will get more money.
      • 4 Years Ago
      Seems a lot of people here are missing the point.

      The people who rent these aren't concerned about the daily rate. I live in Boston and have tons of friends who use the service. The appeal is that you can rent the car for an hour or two to get groceries, hit Target, etc...without plunking down a larger fee to rent the car for a whole day.

      They're located EVERYWHERE, usually only a few steps from your house, you reserve it, you step in, do your errands, and come home. No fuss and it's cheap for what you're doing versus a cab or hoofing it from a far away metro stop.

      It's a great idea, but seems relegated to urban centers where car ownership is more of a hassle than a happy experience.
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