Zipcar Gets Some Competition

Hooray for Zipcar! Photo by Rakka.

Hooray for Zipcar! Photo by Rakka.[/caption

Via Eric Britton’s World Streets, Dave Brooks is writing about the new wave of carsharing businesses that are entering the market. Depending on your perspective, the companies coming onto the market are either completely unlikely, or entirely obvious. Namely, Hertz and U-Haul are beginning to expand beyond rental cars and moving trucks to try to challenge Zipcar’s dominance of the American car-sharing market.

Neither Hertz Connect nor U-Haul U-Carshare is in D.C. yet, though Hertz does have a station at Marriott headquarters off I-270. There is, however, a lot of potential for these two services to take off. This is not because Zipcar is doing a bad job in D.C. In fact, D.C. is the perfect market for Zipcar; it has lots of young, transient people who mostly don’t need a car but really do if they want to take a trip anywhere outside the urban core of the region. Rather, it’s because Zipcar is a company that is currently limited by class-based branding. Zipcar is marketed extremely effectively at young, slightly hip urbanites. Looking at the websites for Hertz Connect and U-Carshare, if they are trying to market to that audience, they’re doing a very bad job. They aren’t trying, though. Both companies have the majority of their locations tied to institutional campuses, usually universities.

What these two companies have the potential to do is to reshape both car rentals and car-sharing by filling different functional and social market niches. Hertz is already very good at getting people at airports a car, while Zipcar doesn’t even try to do that. Similarly, Hertz and U-Haul both have the capacity to make one-way trips right now, while Zipcar does not. Will the entry of these companies into the carsharing market lead, down the line, to a situation where you could rent a car at Dulles for an hour and drop it off in town and vice versa? Could being a Hertz Connect member be tied to low rates for car rentals for longer periods of time, giving carsharers access to longer-distance travel?

It’s very easy to see Hertz and U-Haul bringing some of their structural advantages to carsharing, forcing Zipcar to respond, and the market finally being segmented by culture rather than function. Zipcar would offer a wider array of services to its members, who would remain young hip urbanites, while Hertz or U-Haul would offer very similar services to a squarer set.

If a new firm tried to compete directly with Zipcar, they’d probably lose. Zipcar’s getting to be a bit like Microsoft: big enough to exploit network advantages extremely effectively. That’s why these two companies, targeting slightly different demographics and bringing different corporate advantages, really might be able to introduce competition into the carsharing market, bringing us lower prices, new services and therefore more people trading in their car for a carsharing membership. That’s good news for sustainable transportation.

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