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Car-sharing Consolidation: ZipCar Acquires Streetcar

In large cities around the U.S. and the world, it is becoming more common to see ZipCars on the road. Drivers in the United Kingdom will now be signing up for ZipCar memberships if they want to share a car too. The Cambridge-based company has acquired Streetcar. The combined car-sharing network of Streetcar and ZipCar has about 400,000 members and expands the ZipCar U.K. fleet to 1,770 vehicles.

ZipCar global investments build a network

ZipCar did set up a branch of its car-sharing network in London in 2006. After that, however, ZipCar has seemed to focus expansion efforts mostly on U.S. and Canadian cities, including purchasing competitor Flexcar. Avancar, a Spanish-based car-sharing service, got a minority stake investment from ZipCar in December of 2009. The recent announcement of the purchase of Streetcar cements the fact that ZipCar is trying to create a “global” car-sharing network.

Car sharing testing plug-in electrics

By acquiring Streetcar, ZipCar will also acquire the Streetcar test of plug-in hybrids as a part of the fleet. Streetcar began testing plug-in Prius cars about a year ago. This builds on the July 2009 ZipCar launch of two all-electric EV pod vehicles in London. 15 percent of the ZipCar vehicles are already hybrids, and the company plans to purchase more.

The potential ZipCar Initial Public Offering

This year, ZipCar will post the first quarter of profitability in its 10 year history. It appears that ZipCar will have an Initial Public Offering by the end of this year, turning the large car-sharing network into a publicly-owned company. ZipCars CEO originally said that an IPO was not in the cards, but he now reports that an IPO would allow the company to expand while getting investors some of their money back.

How the ZipCar business model works

Car-sharing services like ZipCar use a fairly simple business model. A $ 50 membership fee (in the United States, other prices vary) allow the “member” of a car-sharing club to rent vehicles by the hour or day. ZipCar systems are especially effective in cities, where people need a car just for one or two days a week. The rental and membership fees for the vehicle cover insurance, maintenance, and fuel. Enterprise, Hertz, and several other companies are currently working on creating car-sharing systems to compete with ZipCar.

Sources:

Bloomberg

Mass High Tech

Xconomy

Earth2Tech

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