Some thoughts on the Zipcar/Avis mergerBy
As word of ZipCar’s impending $500 million merger with the Avis Budget Group spread throughout the Internet on Wednesday morning, few knew what to make of the deal. Mike Lydon, Principal of The Street Plans Collaborative, wondered why more urbanists weren’t discussing the deal, and I spent a lot of the day wondering why so many Zipcar users were upset by the pending merger. If anything, the deal should help ZipCar, and for city-dwellers living their lives without owning cars, that’s a positive.
I’ve been a Zipcar member for two and a half years now. It is, as my girlfriend called it yesterday, a necessary evil. We don’t own a car for various reasons: We have access to my parents’ car for long trips; it’s expensive to own, register, insure, maintain and park in Brooklyn; and we just flat-out do not need one regularly. We go months without a car with no problems, and when we do need our own vehicle, we can use ZipCar. Among our cohorts, this model is becoming standard, and car ownership rates are dropping precipitously, especially in cities.
Yet, despite the need and convenience of Zipcar my 30 months as a member have brought nearly as many problems as smooth rentals. I’ve had cars with expired registrations, cars with physical damage, cars with dirty interiors, cars with no gas and cars with broken headlights. The kicker came when the battery in the ZipCar we had rented for my grandmother’s funeral earlier this fall died during the ceremony, stranding us in the rain in Yonkers for 90 minutes and then fighting with us on the phone over refunding the ride for another 20 minutes the next day.
So when Avis and Zipcar announced the deal, I figured it would be a win-win. Zipcar gets some financial backing and access to more car stock and a better distribution network while Avis gets streamlined rental technology and a rising brand. As Ronald Nelson, Avis’ CEO, said in a statement, “We see car sharing as highly complementary to traditional car rental, with rapid growth potential and representing a scalable opportunity for us as a combined company. We expect to apply Avis Budget’s experience and efficiencies of fleet management with Zipcar’s proven, customer-friendly technology to accelerate the growth of the Zipcar brand and to provide more options for Zipsters in more places. We also expect to leverage Zipcar’s technology to expand mobility solutions under the Avis and Budget brands.”
In other words, procurement, operations, maintenance and, most importantly, weekend availability will improve. Yet, so many Zipcar riders expressed concern, and when I asked my Twitter followers why they felt that way, I received a diverse range of answers. Some people have had bad experiences with Avis while others have pointed out that Zipcar’s marketing has been very effective in creating brand loyalty. As one long-time SAS reader said, the response seems to be a “reflexive dislike of a very corporate-feeling entity taking over a ‘fun,’ quirky-feeling one” which can “feel like losing a friend.” As Felix Salmon wrote, “People actually like Zipcar, which is more than can be said for any of the big rental companies.”
On a more practical level, Zipcar is easy. It’s a website with a very graphical interface that makes renting a car as simple as a few mouse clicks. On the other hand, while I’ve had good experiences with Budget, an Avis subsidiary, renting from them is never easy. Drivers never really know exactly what kind of car will be handed to them in the lot; website prices never reflect the actual total; and car rental agents try to upsell everyone. It’s not a particularly clean business, and it’s one that leads to a lot of user frustration and distrust. For those of us who would prefer to see cities with fewer car owners and more car sharing, the prospects of a rental car company taking over Zipcar should be worrying, if not alarming.
Yet, I find myself seeing the good in this deal. Maybe it stems from my overall annoyance at Zipcar and my slate of negative experiences. Maybe it stems from the hope that the car rental company will integrate Zipcar’s back-end platform and offer up its technical expertise, as they claim they will. Either way, this deal could be a game-changer for car-sharing or it could be the beginning of the end for Zipcar. Here’s to hoping for the former.