Profits absent as Zipcar grows

If Zipcar were available in the city where I live, I'm pretty sure I'd be one of the first to sign up. And the realization that sharing a car is a good idea has struck a lot of people around the country. In fact, Zipcar's membership should hit 300,000 this year, an 80 percent increase compared to 2007 (Zipcar and its main rival Flexcar merged late last year). So why is the Zipcar not making any money?
This is the question that BusinessWeek tries to answer in a new article on the car-sharing club and discovers that the numbers are not in Zipcar's favor. The culprit? High gas prices, of course.

BW says that while Zipcar should pull in $100m this year, the red ink will remain, most likley until next year. The one-price format that Zipcar uses means that the company has to eat the higher fuel costs. CEO Scott Griffith told BW that, "I lose sleep at night knowing I'm paying for gas for 225,000 people."

Competition from the traditional car rental companies who now offer hourly rentals and more car-sharing start-ups are also worrisome spots on Zipcar's future. The whole thing is worth a read.

[Source: BusinessWeek]

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