Avis the international car rental company decision to buy ZipCar makes perfect sense especially when looking at the use of cars in major cities that have an effective public transportation system. For some car ownership doesn’t make sense because of economics, space and how they travel. With their decision Avis is enlarging their database of customers as well as an option for customers who are willing to pay for membership to avoid the cost of ownership. This is especially true for people who live in dense populaton areas like large cities, college/university towns or vacation spots. This will likely create a pipeline for people who will get to know Avis in a new forum of a long term relationship as opposed to the traditional car rental usage. In this current economic climate I believe that Avis got a bargain basement price on ZipCar and the question will be how they utilize this new asset in their current business plan. I would recommend they keep the business separate to keep the more casual ‘one time’ user at their car rental agency and those who are willing to pay a fee for the convenience of car ownership but without the expense of insurance/gas/parking on a daily basis. This will likely create a major ripple effect with the money to truly expand this service and the name recognition of Avis that will make those who had not considered this a viable service to reevaluate their decision.
(Reuters) – Car rental company Avis Budget Group Inc (CAR.O) will buy Zipcar Inc (ZIP.O) for about $500 million to take the top spot in the fast-growing U.S. car-sharing market, racing past larger rivals Hertz Global Holdings Inc (HTZ.N) and Enterprise Holdings Inc EPRIH.UL.