A Zipcar May Soon Replace Your Company Car

November 30, 2010, 12:01 PM HST · Updated November 30, 12:01 PM
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What NetJets became for corporate travel, Zipcar hopes to become for the company car.  As bottom line costs are slashed across corporate America, companies are looking to replace corporate fleets with borrowed cars.

Zipcar allows businesses and ordinary people to borrow a car for only a few hours per day, replacing the need for total car ownership and allowing the flexibility of borrowing a car at any time and for any need.  Plus, since the service allows for extensions via an internet interface, Zipcar customers can rent a car without having to arrange for service at a rental car location.

The company recently released a new Zipcar for Business program which allows its now 10,000 corporate clients to reserve cars online, unlock the door of the borrowed car with a Zipcard, and drive to their destination.  The company features several different cars from small compacts to luxury BMW sedans.  Renting a car costs from $5 to $17 per hour which, when compared tax fares or the full cost of ownership, is an excellent alternative for a growing number of corporate clients.

For individuals, Zipcar provides two different plans: the occasional and extra value service plans.  In an occasional plan, Zipcar customers can rent a car for as little as $7 an hour in Atlanta, or for $69 for a full days use.  The plan requires an annual fee of $60, but includes gas, insurance, and 180 miles per day.  (Additional miles are available at the rate of $.45 per mile.)  The extra value service is very much similar to occasional plans, but comes with a 10% discount on fees, a waived annual fee, and requires only a $50 minimum monthly commitment.

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The company now has some 500,000 members in 13 of the most populous American cities.  Plus, as part of its goal to break into the college scene, the company now has a presence on 225 universities.

Zipcar has a total fleet of 8,000 cars, and announced annual revenues of $130 million in 2009.  However, in the ten years since the service began in 2000, the company has yet to show a profit thanks in part to rapid expansion of its rental service into new localities.

Two rental car giants, Hertz and Enterprise, have expressed interest in the pay-per-hour rental business model, releasing their own services in a few American trial cities.  The companies hope they can edge out Zipcar in a market it has yet to cover and a market the two giants have all but cornered: airports.

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