Zipcar has members in US, UK, Canada, Spain and Austria
Avis Budget Group is expanding its presence in the US car-sharing market.
The second biggest car rental company in the US is spending nearly $500 million in cash to acquire Zipcar, a 12-year-old car-sharing
company whose third-quarter earnings jumped 15 percent. Avis\'s third-quarter profit increased 34 percent.
Car sharing is popular in college towns and areas where people may need a vehicle for a few hours. It can be a good deal considering that gasoline and insurance is included. Car rentals usually are more cost effective for a longer period.
Zipcar, headquartered in Cambridge, Massachusetts, has struggled since going public in April 2011 although the number of members sharing cars and paying annual fees has steadily increased to around 767,000. Zipcar has more than 11,000 vehicles in the United States, Canada, Great Britain, Spain and Austria.
Avis is far larger but says with the acquisition of Zipcar it expects $50 million to $70 million in annual savings by cutting costs in its fleet-life cycle. Rental car companies typically purchase fleet vehicles at significant discounts from manufacturers and sell off their older vehicles into the used car market at a profit.
\"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,\" Avis Chairman and Chief Executive Officer Ronald Nelson said.