Both Zipcar and Flexcar are known as the two biggest players in the nascent industry of renting cars by the hour in urban areas and around college campuses. Their pick-up and drop-off locations have popped up all over the country, as well as Canada and London, though surprisingly the two companies only compete directly in Washington D.C. and San Francisco. Neither company, however, has managed to turn a profit, so they've decided to merge, combine their fleets and operate under the Zipcar brand name out of Cambridge, MA. Though both firms operate fleets that number in the thousands, neither had become big enough to enjoy those cost savings that only come from large economies of scale. Following the merge, they should be able to capitalize on reduce costs for everything from the cars themselves to the insurance with which they're covered. The execs handling the merge expect their first profit maybe within a year, and then an IPO may follow shortly after. For anyone who uses these services, the merger is undoubtedly great news. We can't attest to how well the system works having never tried it, but perhaps we'll give it a go now that renting cars by the hour is going mainstream.
[Source: Washington Post via AutobloGreen]
PRESS RELEASE:
Zipcar and Flexcar Agree to Merge
Combined company to enhance member experience, fuel car sharing growth
CAMBRIDGE AND WASHINGTON DC (October 31, 2007) - Zipcar and Flexcar, leading car sharing providers, announced today the companies will merge. Together these two companies will represent an international network able to deliver new member benefits and accelerated growth to the burgeoning car sharing industry. The combined company will operate under the Zipcar brand and be headquartered in Cambridge, MA, under the leadership of Zipcar's chairman and chief executive, Scott Griffith.
Zipcar and Flexcar currently operate car sharing programs, providing members with on-demand access to a diverse fleet of vehicles conveniently located throughout major metropolitan areas. To use the service, members reserve a vehicle online or via a mobile device, use a smartcard to open the doors, take their trip, and then return the car at the end of the reservation. A simple hourly or daily fee covers gas, insurance, maintenance, parking and 24-7 emergency service. The merger will come at a time when car sharing is increasingly acknowledged as a smart urban lifestyle choice and transportation alternative. Today, with growing competition within the industry, and more than 30 independent car sharing companies operating in the U.S. alone, the combined Zipcar will have a stronger base from which to compete, particularly against leading car rental firms' product introductions targeted at the car sharing industry.
"This merger will be a classic example of the whole being greater than the sum of its parts," said Scott Griffith, CEO, Zipcar. "The combined company will provide our members with increased benefits and improve our ability to expand into new markets. The management and employees of both companies are proud to be contributing to the progression of the industry, and we believe as a combined company, we will be more effective in making car sharing a mainstream form of transportation in cities throughout the U.S., Canada and Europe."
Zipcar currently operates in New York, Boston, Washington D.C., Chicago, San Francisco, Vancouver, Toronto and London while Flexcar operates in Seattle, Portland, San Francisco, Los Angeles, San Diego, Atlanta, Pittsburgh, Philadelphia and Washington D.C. Both companies provide car sharing on college campuses where traffic congestion and limited parking are frequent challenges.
"When we acquired Flexcar in 2005 our goal was to bring car sharing to more people in more places," said Steve Case, Chairman of Revolution LLC. "The Zipcar merger will accelerate this effort, and we look forward to continuing our commitment to this important industry."
"With very little geographic overlap, the combined company will serve its members by taking the best attributes and features of each company and making a great service even better," said Mark Norman, formerly Flexcar's CEO, who will assume the roles of president and COO of Zipcar at closing.
Upon merging, member benefits will include:
- Award winning technology: Members will access the vehicles through Zipcar's Z3D, industry-leading technology. The proprietary platform fully connects the information flow between vehicles, members and Zipcar.com
- Universal membership: The Zipcar membership will enable the self-service reservation of any vehicle in any city in the combined Zipcar, Flexcar network simply by using the Zipcar.com website or mobile interface.
- Premium insurance: All members will be covered under an industry leading insurance plan with limits of $300,000 per accident.
- More convenience: Especially in Washington, D.C. and San Francisco (markets where both companies currently operate), the combined fleets will give existing members of each service hundreds more locations from which to choose. In addition, members will now be able to reserve cars in more cities.
- Green options: Both companies have a commitment to environmental responsibility, and now members will have access to more hybrid vehicles
Car sharing programs are proven to have significant positive environmental and social impacts. National studies show that each shared car replaces up to 20 privately owned vehicles. Car sharing members report driving significantly less and are more likely to walk, bike, and use public transportation. Members also report savings of $500 or greater per month compared to the average cost of owning and operating a car in the city, and businesses have saved thousands of dollars by eliminating company fleets or augmenting their transportation offerings with car sharing programs.
All media are invited to join a telephonic press conference today (Wednesday, Oct. 31, 2007) at 12:00 p.m. EDT. Please visit www.zipcar.com/press/press-call for details on this and additional information surrounding this announcement.
About Zipcar
Zipcar is the world's leading, with more than 120,000 members and 3,500 vehicles in major metropolitan areas and colleges campuses in more than 35 cities, including Boston, New York, Chicago, San Francisco, Washington, DC, Vancouver, Toronto and London, England. As a leading urban lifestyle brand, Zipcar provides a convenient and cost effective transportation alternative for individuals, businesses and universities throughout the United Kingdom and 18 North American states and provinces. For more information, visit www.zipcar.com.
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