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Avis buying Zipcar in deal worth nearly $500M

Valparaiso University has formally announced their relationship with Zipcar Inc. world's leading car-sharing network. Currently two cars  available for

Valparaiso University has formally announced their relationship with Zipcar, Inc. the world's leading car-sharing network. Currently two cars, available for rent, are parked outside the Harre Union on campus. | Andy Lavalley~Sun-Times Media

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Updated: February 4, 2013 2:41PM



Avis is leaping into the car-sharing service business by buying Zipcar for $491.2 million, aiming to capture a new type of customer and technology that will vastly expand its car rental options.

Car sharing has become a popular alternative to traditional rentals in metropolitan areas and on college campuses, allowing members to get a vehicle for an hour or two for short trips instead of renting a car for a day or using mass transit. The segment has been growing while traditional car rentals have struggled in the current slow-growth economy.

Zipcar, which was founded in 2000, has more than 760,000 members, triple what it had in 2008. It went public in 2011 and 2012 is expected to be its first-ever profitable year. Avis Budget Group Inc. is the third-largest U.S. rental car company, behind Enterprise Rent-a-Car and Hertz Global Holdings Inc.

Zipcar parks cars throughout cities and college campuses, which allows renters to avoid waiting in lines at traditional car rental counters. Some areas provide reserved parking for the cars, which can be located online or through the companies’ smartphone applications. That technology was attractive to Avis, which hopes to expand Zipcar’s vast technological capabilities to its own business.

The car-sharing companies pay for fuel and insurance, costs not included in standard car rentals. Although the hourly rental options are quicker and cheaper than renting a car by the day, Zipcar and other car-sharing services are generally more expensive for rentals longer than 24 hours.

To join Zipcar, members pay a $25 application fee and $50 a year. Rates run from $7.50 an hour and include gas, insurance and 180 miles a day.

The acquisition will help Avis better compete with Enterprise and Hertz, which have their own smaller car-sharing services. And having access to Avis’ fleet of cars will help Zipcar meet high demand on weekends when most people take a trip to the grocery store or run other errands.



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