Avis to buy Zipcar

Given the success of car sharing in the DC-area, with Flexcar, later acquired by Zipcar, and Zipcar, plus the more recent entry of car sharing operations by Enterprise and Hertz into DC, plus the even more recent entry of the one-way car sharing service, Car2Go, DC must be a hotbed of carsharing in the U.S.

The one thing we don't have in DC is a nonprofit car sharing organization like they do in San Francisco, City Car Share, Philly Car Share in Philadelphia or  in Montreal, Communauto.  The disadvantage that nonprofit car share organizations have is having to raise capital for purchasing vehicles, especially when they have to replace the original fleet.

So that Avis, a major car rental company, is purchasing Zipcar, is quite interesting in what it communicates about car usage as an application or service (see writings on "product service systems" among other things).

See the Associated Press story, "Avis buying Zipcar in deal worth nearly $500M."  Also see "Why the 49% premium Avis paid for Zipcar is a bargain" from Quartz, "Zipcar and the Death of Entrepreneurship" from LinkedIn and "Zipcar: Entrepreneurial Genius, Public-Company Failure" from the Wall Street Journal. (Thanks to Notions Capital for the heads up on the latter articles.)

Note that while I know you can use Zipcars in other North American cities, I didn't realize that they have coverage in some UK cities including London and Barcelona through their acquisition of Avancar (press release).  And apparently the same Zipcar infrastructure works between the systems.  Of course, I've yet to test it out.

I don't think there will be many changes.  The article suggests that the Avis fleet can be used by Zipcar members during peak demand periods.  I don't expect that will happen any time soon as it will require a variety of changes to how Avis manages their cars, plus most of their car rental locations are not in those kinds of places where car share members are likely to be living.

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WRT the articles by Dennis Berman about "the death of entrepreneurship," this is an issue, but not in the way that he thinks, at least not to me. The problem has to do with scale and operating in multiple cities and scales. It's a similar process to how in many markets (especially in retail and increasing in retail development, at least in the major metropolitan areas) local operators have been supplanted by national firms. In select markets that are more engaged as part of the global economy, such as the real estate market in major cities like NYC, DC, San Francisco, Seattle, Los Angeles, etc., international developers and financiers may trump even national actors.

It becomes very difficult for comparatively small companies to operate in multiple cities and get access to the necessary capital to build and expand their business. (This by the way is an issue faced by my own business, BicyclePASS. I know how we can position ourselves to be a major force nationally. Capital is a key element in our ability to expand. And patient capital--because in start up phases you lose money, you don't make money--is especially hard to find.)