Avis acquires car sharing company Zipcar for $500 million
thenextweb.com
thenextweb.com
ZipCar can't do that because their growth is constrained by the need for expensive assets (cars). Even if they were popular enough to expand by a whole order of magnitude over the course of a year they would require a huge injection of additional cash from additional equity sales or lending.
As a result, it just isn't really possible for ZipCar undergo the huge upside that a web-only company can.
The difference with purely web companies is Zipcar has a lot of fixed costs, if they want to expand to double the amount of users they will have a ton of capex to double the amount of vehicles (yes, you can probably squeeze a few more hours of usage into a car, but like planes there is a fixed number of hours any given vehicle can be generating you revenue per month). Web companies also see infrastructure costs dropping over time while Zipcar sees the opposite (after accounting for economies of scale, cars are not getting cheaper year after year).
Yes! Make this work - yesterday, preferably!
If I just need a car for a couple of hours, budget crappy domestic car is fine.
Anyway, I'm curious why you're getting all worked up and accusing me of "bigotry" because I don't like domestic cars. What are you, some kind of GM publicist?
Probably because instead of just posting one comment that said "actually there are some pretty good domestic cars now, like A, B, and C", you've made repeated comments using emotionally charged words like "slander" and "bigotry", with a general tone that implies that you're personally offended by my dislike of domestic cars.
The domestics didn't piss me off because they were unreliable, but because they each were designed somewhat poorly -- as an example, one featured a HUGE miles-per-gallon readout in the center of the driver's console... and you had to move one of your hands to see either the speedometer or the tachometer. Crap like that, bad decisions.
So I don't think the "crappy domestic cars" bit is worn out.
EDIT: someone's gonna ask. IIRC the Americans I drove were a Ford Focus, a Chevy Aveo, and a Ford Escape.
Daewoo went to the wall, with a few projects in the drawing board, what would become the Aveo was one of them. GM bought them out, then set to work homogenising the assembly of the Aveo with wider GM techniques and parts.
There is undoubtedly some Korean influence remaining I'm sure, but it's predominantly a GM car - they were quite vocal about all the improvements they introduced.
Now if that lack of an annual fee really is what enticed you then maybe the economics of these services aren't compelling enough to built independent, sustainable businesses.
quid = pounds sterling (GBP), UK currency
chap = guy
missus = wife or partner - pronounced similar to "Mrs"
tube stop = London Underground ("the tube") station
Ah, we've got 20 cars within 1 mile of our house. That certainly makes it easier and I generally have no problem finding a free car within easy walking distance even on short notice.
The original deal was already changed with the Streetcar -> Zipcar conversion. My original Streetcar deal was for no annual fees and a £150 deposit (that would be refunded if I left Streetcar). Zipcar gave me the option of:-
a) Getting my £150 back and leaving Zipcar, although I would be free to rejoin and pay an annual sub.
b) Keep my existing £0/year deal but have the £150 deposit converted into £150 of credit that had to be used within 9 months (I think). Went for this and the £150 credit was quickly gone in two 24 hour rentals to go see family.
To be clear, I kind of expect Avis to end up backing out of the "founder members" deal and I'll be annoyed if they do, but there's nothing much I can do to stop it, and I don't see anything in the existing (or previous) T&Cs that would prevent it.
On one hand Avis are big enough to just keep the deal going for the existing members, maybe start to offer a new service that is only available to members that pay an annual sub. Or maybe they're big enough that they don't care about the small group of users that don't pay annual subs and will force them to pay up or go away.
[EDIT] And, yes, there's loads of other things they could do to annoy me more.
I don't have a car, and so I rely on zipcar when I do need one. The problem is that if I need it a few times a month it's rediculous compared to the cost of having a car.
One month I needed a car a lot, and wound up spending $850 on zipcars! That sucked.
This is true only if you ever own a car white it is under financing and it loses its full value over the course of the loan.
Edit: unless you were simply dividing the cost of the car over the number of months you'd be driving it and you already factored value retention into that number, in which case either you don't need to worry about money anyway because you are rich or there are much better ways for you to better manage your money!
Whereas if you take 15% of $25k off every year, the car would be worth nothing after about six and a half years. We know that's not true.
If it were straight line though, you could just have a predetermined residual value for a specific useful life of the asset, and then depreciate the percentage of the difference from the original value and the residual value each year. You can also easily have depreciation where the residual value is less than the fair market value at the end of the asset's useful life or stated period though. You can never perfectly predict the residual value after all, but that's what capital recovery, or gain on disposal are used to describe.
We do this for each rental after being stung for damage done to the vehicle after we'd returned it[1]. It's an annoying flaw in their rental model; I now take photos/video of the car after I've returned it to hopefully prevent getting the blame in a future similar scenario.
1. You're essentially liable for any damage up until the time that it is next booked out. We had to pay as there was nothing we could do to prove it wasn't us. That damage even includes things like "damage caused by unavoidable events such as floods, hail, wind, trees falling, etc."
This personal choice has its issues, sure, but I have been happy for 7+ years this way, and aside from the one time I tried to rent a car at SFO to take for a weekend getaway, it has never been a detriment to my lifestyle.
BofA at least already does this - https://www.bankofamerica.com/privacy/accounts-cards/shopsaf... ..and a better frontend to it would be great!
https://www.citibank.com/us/cards/gen-content/messages/van/i...
You are only doing yourself a disservice by not getting a credit card. I get purchase protection, price matching, fraud protection, free extended warranties, etc, for free, from my credit card provider. That's a pretty good deal.
A credit card isn't a ton of protection for the rental car company anyways, regardless of authorization it's not likely you have a credit line to cover the entire car.
Why would they lower their rates? Avis isn't a charity; they're in the business of making money. They know how much people are willing to pay for flexible car rental: at least $850 per month. No reason to lower the prices as long as people are still willing to pay.
Avis is buying Zipcar at least in part to raise their rates and reduce competition with the rest of Avis.
1) Availability There's no way you can reserve a ZipCar exactly WHEN you need it. Most ZipCars are spread evenly between locations and in a popular ones you can only reserve something available a few days in advance. This makes the idea of using ZipCar useless because now you need to waste an hour of your time commuting to a remote ZipCar location. Weekends? Forget about it. Unless again you'd like to travel to an inconvenient remote location or book 3 days in advance.
2) Missing/broken car - ruined plans It happened to me twice but this was enough to make me reconsider ZipCar. Once I reserved a car for a day for a very important trip but when I showed up at a parking location my car was missing. ZipCar CSR on the phone refunded my order and offered drive credits but has no idea of what was going on. Needless to say how frustrating the whole experience was. The second time my reserved car was out of order, it just simply wouldn't drive normally. No way I would be happy to exchange this stress and ruined plans for 50$ in driving credits!
3) Dirty Car/low on fuel A couple of times the car I reserved was as dirty inside/outside as it can be after days of abuse on the country roads or in the mud races. And the only thing I could do is to report the issue to ZipCar. I still have to use this dirty car for my business trip.
The other annoying issue has been a car low on fuel. Despite taking a car for a couple of hours the first thing I have to do was to locate a gas station and fuel the car.
4) Overpayment and stress First of all, advertised "starting as low as" prices are non existent or impossible to find. They say you save money using ZipCar. This might be true if you're using ZipCar a couple times a month for a few hours. If you need a car for more than that you're certainly better using a conventional rental company.
Considering that a few rental companies offer "driver pickup and dropoff" service it makes ZipCar highly inconvenient and stressful if you think about all above mentioned issues. I personally found myself extending reservation hours a few times, hurring up like crazy when there was not an option to do it. 5 or more hours using ZipCar equals in price to a 24hrs. using almost any other car rental company.
5) Damage horror stories ZipCar damage waiver is a joke. You can buy an extended waiver which covers only 750$ in damage. Again unlike other conventional rental companies which would happily provide you with a full damage waiver.
Fortunately it didn't happened to me but there's a bunch of horror stories around when ZipCar users were asked to pay fully for the damaged car or had to fight with ZipCar for a long time even if it wasn't their fault.
There is a market of course for car sharing. But I think what people are forgetting is that the reason why someone might go with a name brand (McDonalds/Avis/Mariott etc.) is that you get the "system" and some quality controls and hopefully the same product anywhere. This will be much harder to scale with a zipcar type system (or airbnb) because you have much less control over the product or the interaction with the end user. You can't have a maid supervisor make sure the room was clean and all the linens are in place. You can't centralize the cleaning, maintenance and readiness of the vehicle inventory.
I'm not sure there's anything that can be done about broken, damaged, or dirty cars other than to have managed stations where you pick them up. Which turns it back into a regular car rental outfit. But you're always getting a freshly washed car, a full tank of gas, and at least a cursory check by staff.
At least it's cheaper than ZipCar though, which is why I occasionally go back to try again.
The cars are always clean and I have never had a low fuel situation. Now, I rent cars in the Downtown Oakland area so I can't say the same for SF but thats just me. Oakland/Berkeley does have the weekend availability problem but if I know I am going somewhere on the weekend I can book as late as Friday night and still get a car I want.
The cost. I pay as low as $7 an hour for a Mazda 3, $9 an hour for an Audi A3, Mini, VW Golf. I have a small discount via FoundersCard however. Still though, those prices are pretty great to rent a car, especially since Zipcar covers gas, maintenance and insurance.
Insurance. If you do not have a waiver, you pay the first $750 of an accident, Zipcar pays the rest. If you have a waiver ($10 a month), you do not pay anything. Also, it counts as real car insurance so when you do buy a car and need auto insurance, you can say you have had continuing coverage. http://www.zipcar.com/how/faqs/what-damage-fee
For most times you want to use it (weekend), everyone else does too, so there's never a way to "spontaneously" use a ZipCar instead of something else (you have to reserve days in advance), and it's way more expensive than you'd been led to believe.
But secondly, I discovered hourly-based rentals just don't work. I was the idiot who returned my 4-hour rental an hour late, simply because of factors outside of my control (insanely long lines where I was, too much traffic coming back, but since I don't usually drive or go there, how was I supposed to know?). I felt horrible for the next customer who didn't have a car, had to pay a fine, and realized that life and traffic are just too unpredictable for reserved hourly rentals to make any sense at all.
If ZipCar had a huge fleet where everyone who wanted one in Manhattan on the weekend could get one, that would be great... but then it would be sitting unused during the week, and be way too expensive.
This is the fundamental reason private ownership of vehicles is the mode, IMO. Everybody tends to use them at the same time.
One would one thing a constantly rental price could be used to balance these demand fluctuations. ZipCar could raise prices as the weekend approached just enough so a few cars would be left on the weekend for those willing to pay a serious premium.
The limit might be that most users would be very annoyed at the resulting uncertainty in how much they would pay for a car. A caveat to the efficient market hypothesis.
The system is designed specifically to disincentivize people from doing what you did -- to book without really having a good sense of how long something is going to take. This is to prevent people from screwing over the next person, which as you said, you felt bad about. And you should -- you fucked them.
The system is what it is, and is designed for a certain kind of use. If you're going to take a trip during a relatively in-demand time (meaning, not the middle of the night) that's going to take 3.5 hours +/- 1.5 hours, you either book for 5 hours or you probably shouldn't use Zipcar. You can risk it to try to be efficient, but then you might pay a big ole fine and screw over someone else.
If you need to be able to take highly variable length trips and not commit to a given rental length, then maybe you should buy a car. Don't blame Zipcar when you're trying its very structured system in a willy-nilly manner.
You literally had a worse experience on your first drive than I've had on any of my probably 100+, and you're condemning the entire service -- nay, the entire business model -- based on one experience. One. Surely you can see how this seems like madness.
Also they have a zero-liability waiver for $80/yr.
- you have to put gas in a car. That's hardly much of an inconvenience.
- they are dirty? Its a sharing system, what do you expect? People are slobs mostly, and when there's no incentive to keep something tidy they don't. public transport is no different.
Booking 3 days in advance doesn't seem like such a big deal either.
I don't see the point of zipcar to start with. Just rent a car for the day or use public transport. if you live in an area where those two don't apply, buy a car.
fortunately zipcar has been assimilated into the larger car rental picture now which should improve things.
We can do 95% of stuff with existing public transport (since it is very good in London and the UK). Buying a car to cover the remaining 5% is overkill and would cost way more than to use a Zipcar. The annual upfront costs for maintaining a car (VED, insurance, MOT, parking) are going to be more than our average yearly spend on Zipcar, and this doesn't even take into account the initial car purchase or leasing/depreciation.
24 hour rentals to go see nearby family (not served well by public transport) are probably slightly more expensive with Zipcar than a traditional rental company but way more convenient to walk 200 yards to the Zipcar than miles to the nearest rental car depot; especially with a 3 year old (and a car seat) in tow.
It's very useful to be able to rent a Zipcar for 2 hours for £12 to go take a bunch of stuff to the dump, nip into the supermarket and stock up on heavy/bulky items then go to the local DIY store and get a bunch of stuff that can't be easily carried on public transport. Sure, DIY shops will deliver, for a price. Supermarket delivery can be free but the free delivery slots don't always work out time-wise. People can come and collect the stuff that would go to the dump, but it costs.
So, you may have no need for Zipcar, but it does work for plenty of people.
I've been a member for over 5 years. I live in a popular neighborhood in SF. It's to be expected that weekends or special events affect availability. But there are so many lots around its easy to walk an extra block.
I've been in 2 accidents in their cars. First time was pretty bad, 2nd one was minor. Each time the most I had to pay was a $500 deductible. That sucked, but was nothing compared to how much I had to pay for an accident many years ago in my own car. (This all makes me sound like a terrifyingly bad driver, but I'm not!)
Just in the last 2 days I used Zipcar. I was heading to Stinson Beach for New Years. To rent the car overnight was $101. It was 2 blocks away.
I called Enterprise downtown and got quoted a car at $28/day. Awesome, I think. Well, no. They closed at 3pm that day. And they're downtown. And although I only needed the car for 1 day, they were closed on Jan 1 and would have cost me $45 to drop the car off when the place is closed. So then I would have bad to worry about parking a car I didn't need. Also, since I refuse to carry a credit card, in order to use my standard bank card (the thing that has all the money I actually have, and not artificial debt like in a CC), they want paper copies of two bills to my house and my last pay stub. Seriously? I don't get paper anything anymore, much less a pay stub.
So in the end, I payed a little more for the Zipcar rental. I got the convenience of it being local, flexible, and less shit for me to worry about. That's why I like Zipcar.
I've had the occasional frustration with them. Dirty car, no gas, broken card. Little infrequent things that are frustrating at the time but are rare. You call and report the previous driver, they get fined and don't so it again. It's happened to me a couple times.
So I refute your claims about Zipcar being so bad. I've used them a lot longer and quite happily too. I'll continue as long as they don't become like other rental car companies.
One time the garage where the car was supposed to park wouldn't open (I was returning it). I called them, they said, leave it somewhere on the street, call and tell us where it is, and we'll deal with it. It was after midnight. Awesome.
Another time the car wasn't back from another driver. They reserved me one a couple blocks away and extended my reservation by an hour to make up for lost time.
Those are literally the only two instances I can think of to complain about, and their service was prompt and helpful both times. The cars are always very clean, and the community is great about keeping the gas above the required level and getting cars back on time, for the most part.
Yeah, the cars get gobbled up on the weekend. Just like hotel rooms get gobbled up around the holidays. There's a finite number of cars and demand goes up and down. Part of the deal. If you don't like it, pay to own your own car so you can have one nearby at the drop of a hat anytime (and pay hundreds and hundreds of dollars per month for that convenience). It's frankly just unrealistic to expect that Zipcar is going to be able to provide you with car-ownership levels of convenience all the time.
I pay about $60 a month with Zipcar and there's zero hassle 90% of the time. If I owned a car, I'd probably pay twice that in insurance per month, plus gas, plus parking, plus maintenance. But yeah, holy shit, I can't always get a car at the last minute on Saturday. What a shit service.
* You live in a popular neighborhood in SF with lots of nearby ZipCar lots. Many people do not have that luxury.
* ZipCar was more flexible for a holiday rental. Fine. Any non-holiday Enterprise rental would not have had that problem.
* The credit card issue: you're in the minority. Most of us are fine with having a credit card and even many of us use it as more of a "charge" card, just as a buffer between the merchant and our bank accounts (not to mention cash back, airline miles, etc.). I'm not trying to say "change your ways"; I'm merely pointing out that this was a special situation for you in particular, and that most people would not have to jump through these hoops to rent a car from Enterprise.
* The last time I rented a car, they had someone come pick me up and take me to the rental location, free of charge. Maybe Enterprise (or the rental location you were looking at) doesn't offer this service, or maybe their policies have changed, but many car rental companies will do this for you. Yes, it's still more convenient to walk a block to a lot to get your car, but a driver picking you up is still pretty damn convenient. Not to mention that you know when you get there that the car will actually be there, and be clean.
So in the end, you're condemning traditional car rental services mainly for things surrounding your special circumstances, which is a bit unfair. On the other hand, it's great that ZipCar is there to cater to your needs! The bottom line is that ZipCar got you where you needed to go, and under terms you found acceptable. Definitely a win.
On an off-ish-topic side note, I do own my own car (and live and work in SF), and despite how often I tell myself I should just get rid of it, stories like this make me very glad I haven't, despite how much money I'd save without it. I hate having to depend on others so deeply for transportation, with no fallback plan should the stars completely misalign.
(Disclaimer: I own a small amount of ZIP stock, which hopefully will be above water again soon.)
Not sure what you're talking about with 4--when you go to reserve a car it shows the hourly and daily rates right there. The rates for Zipcar are higher than, say, Enterprise, but they do include fuel and insurance, and you don't have to go through all the paperwork every time you need to rent a car. The cars themselves are also of higher quality. I find that I save a lot of money using Zipcar instead of owning a car, and that it's far more convenient and readily available than traditional car rentals.
As for 5, you're all wrong: the built-in Zipcar insurance has a $750 deductible--you don't pay anything above that no matter what--and the $750 damage waiver covers the deductible. I never buy it since it's -EV and I can cover $750 in a pinch.
Assuming gas is $4 per gallon, a zipcar has a 15 gallon tank and had 10 gallons when picked up, charge the driver $6 per gallon below the 10 gallons it had when it was picked up and pay the driver $5 per gallon for each gallon more than 10 gallons it has.
The only problem I see with this approach is quality of fuel used by the driver. There is no way that I know of to enforce the octane level of the fuel pumped. However this is a problem that will exist either way.
There could also be sensors for other things, such as a smoke detector to make sure that someone isn't smoking in the car. I don't know if it's possible to make a sensor that makes sure a car is kept clean, but as more and more cars are used for car sharing I see the demand for such sensors to rise enough to justify bringing such sensors to market.
With ZipCar, the rule is you should never leave a car with less than 1/4 tank of gas, and if you do, you're hit with a $20 fee. I think the GP is upset he had to spend time filling the tank back up.
1) Zipvan. U-Haul is essentially rape. Zipvan is $12/hr for a Ford E-series van (E-250 I think). Perfect for transporting stuff. Also just barely fits in most underground garages (6'6"), but fits, unlike trucks (although U-Haul does rent vans, too). Only needing a van for an hour or two is perfect.
2) Use when on a trip. The thing I hate is renting a car at the airport (say, $20-100/day), then driving it to a hotel, paying $50/day to park, and not using it much (maybe not even until I drive back to the airport). Yet, if you have to go to a colo or something, having a vehicle is essential, and a taxi really sucks.
3) Trying out random cars. I wanted to see how I felt about the A3 and the BMW and the Volvo. etc.
4) When my car is broken, and I need a car at the very last minute, there are a few zipcars near my house. If I'm not picky about the vehicle, I can almost always find something within walking distance; failing that, long walk or taxi. Public transit from Oakland to the Peninsula is defective (3h+ for a trip I can do in a car in 45min). This saved me when my garage door was broken in a way which prevented me from taking my car, which I discovered a few minutes before I needed to leave. The alternative was paying $150 for a taxi (which in the Bay Area isn't even that likely to work), or stealing a car on the street, so Zipcar paid for itself.
My big problems with zipcar are that a lot of the cars are badly maintained or dirty, and I nearly always end up filling them up with gas (and often the stupid card doesn't work, so I pay on my own credit card and get reimbursed), and they don't have any really awesome cars (I'd love an A7/A8 for $25/hr), and the problem with "oh no, what if something goes long and I have to extend".
This part is flat out not true - I believe it varies from fleet to fleet so I won't quote you any numbers, but Zipcar definitely do proper damage waivers. Please contact your local Zipcar office or check online for the actual figures :)
Better let them know it's not possible to avoid returning cars to their place of rental yet...
It's more expensive, the cars are all smart cars, and you have to leave the car within a home location.
A side effect of this is in the mornings, when most traffic is from stations towards the city centre, there are no bikes at stations; and in the evenings, when most traffic is from the city centre towards the stations, there are no free return spots near stations. To compensate for this, lorryloads of vans shuttle back and forth in the opposite direction to the commuters.
Obviously, zipcar would follow a different demand pattern to a bike hire scheme, but there's still a risk there'd be large scale patterns in demand - for example in the holiday season all the zipcars might get driven to the airport.
That isn't an insurmountable problem, of course. Presumably Avis deal with this every day. But presumably they don't plan to turn Zipcar into Avis.
The Barclays Bike Hire coverage is good in central London but not good for the 'burbs. I'd consider using one every day for my commute however:-
* my commute would be right on the edge of 30 minutes (it's ~8 miles) and those bikes aren't the fastest (but that's good for training!). To be safe I'd have to break it up into two journeys with a 5 minute break in the middle to avoid being charged for £1 a usage on top of access. Or I can split it up into a cycle and then a run (good except that I sometimes I have to lug my work laptop with me which isn't idea for running).
* even with the upcoming (Spring 2014) extension to SW London I'm still going to be a 5 minute run from the nearest bikes. Right now it's a 4 mile run to the nearest docking station.
* no way to mount panniers, limited carrying space in the front 'basket' area, for bigger loads I'd need a rucksack and I much prefer panniers to a rucksack
£90 for annual Barclays Bike access (and no hire fees) is roughly comparable to the wear and tear costs for my current bike (~4000 commuting miles a year, proportional costs for brake blocks, chains, chainrings, sprockets, rims, hubs, bottom bracket, [carbon] forks). It's certainly cheaper than ~£900 for the annual train ticket.
Not having to worry about theft is a major plus, nor is having to carry good locks to lock up the bike should I have a mechanical that I can't fix quickly (I do the nursery run so I can't be home late).
I would also be helping the distribution problem as I'd be dropping off a bike near a major rail terminus in the morning, and using one from there to go home.
I agree with others here: desolate stations could be refilled via economic incentives for riders.
Solution seems straight-forward to me: if you park at an empty rack, or if you take a bike from a full rack your trip is free (if you are casual user) or you get small amount of credit (50p?) if you are a subscription user.
My experience with cyclehire though is they always choose the most complicated path. As an example they way over engineer their authentication. Besides a password you have to answer several security questions. Feels so disproportionate.
Regarding complication of hiring Boris Bikes, note that if you want to do a one-time (without an existing account) hire of two bikes, you need to insert and remove your credit card 4 or 5 times, and will get two or three pieces of paper out! The UX is just insane.
According to [1] they have a fleet of 14 electric vans (pulling trailers of 20 bikes), 10 diesel cars (pulling the same trailers), 7 sprinter vans (16 bikes) and 3 DAF 7.5 tonne trucks (50 bikes each). But that fleet is to deal with peak demand, such as during tube strikes.
[1] http://www.bbc.co.uk/blogs/mindthegap/2011/01/moving_hire_bi...
"See, Paris has a handful of steep hills. The Montmartre neighborhood, for example, is perched at the top of a rise some 450 feet above the Seine. Taking a bike down the hill has a certain obvious appeal, but riding back up to the top... not so much."
"Over the summer, though, the good people of Vélib added a simple behavioral incentive to the system: Return your bike to one of 100 stations perched over 60 meters above the rest of the city, and 15 minutes of free riding is added to your account."
http://globalmoxie.com/blog/velib-bonus~print.shtml
I think it's neat they managed to put some game mechanics in to the pricing model to encourage users to make the whole system work better for other users.
On the plus side, I was also told the car only had a quarter tank full, but found a full tank. I didn't bother to report that, so I guess things evened out.
Zipcar I mainly use for longer trips (since CCS has a per-mile charge), moving vans (through ZipVan), or as a backup option.
All the talk in this thread about this acquisition being an anti-competitive move by Avis ignores the fact that Zipcar isn't the only game around in many cities, and will continue to need to compete on price and service.
An 18 year old is at least twice as expensive as a 40 year old business man when it comes to car insurance.