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Re: [NewMobilityCafe] Warning to Zipcar: Traffic ahead - The Boston Globe

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  • Todd Edelman, Green Idea Factory
    Hi, This main-streaming of carshare is a good thing. Some thoughts, questions: * Will the buying power of these bigger players encourage the creation of
    Message 1 of 5 , Apr 1, 2008
      Hi,

      This main-streaming of carshare is a good thing. Some thoughts, questions:

      * Will the buying power of these bigger players encourage the creation of "softer" cars - with active pedestrian protection, doors that don't open into cyclists and so on? I hope they can take advantage of economy of scale to get carmakers to do things differently. Zero tailpipe emission carshare cars would be great as well.

      * Now that these old-fashioned businesses are literally buying into New Mobility, I wonder if they will also take an interest in underwriting some public bicycle operations...

      * For those of use who mainly see carshare more as a step in the right direction for cities, rather than as a long-term solution, I wonder how we can take advantage of these latest developments to educate the mainstream about the things we discuss on these lists. I know that... I suppose we can say "classic carshare" people are already thinking green, so I wonder if many of the people who used carshare branded by these old stalwarts will end up being more conservative types.

      - T

      Dave@... wrote:

      Kind thanks to Dave Brooks for the heads-up.

       

       ____________ _________ _______

      Interesting read about Hertz, Enterprise and U Haul.  

       

       

      Zipcar CEO Scott Griffith: Innovation Economy video Zipcar CEO Scott Griffith explains how the company's car access technology works.

      Innovation Economy

      Warning to Zipcar: Traffic ahead

       

      March 30, 2008

      Zipcar Inc. may have finally woken the dozing giants of car rental.

      more stories like this

      Since Cambridge-based Zipcar got started in 1999, it has attracted a loyal customer base by re-imagining the concept of car rental.

      Cars are sprinkled throughout city neighborhoods. And there's never any paperwork or standing in line required to borrow one: just wave a membership card over the windshield, and the doors pop open. Seconds later, you drive off in a Mini Cooper, Ford Escape, or BMW sedan. Gas and insurance are included in the hourly rate, which hovers around $10.

      With a fleet of 5,000 vehicles parked in cities such as London, San Francisco, and Boston, and 180,000 members, Zipcar claims to be the world's largest car-sharing service. Last fall, Zipcar took over its only significant US competitor, Flexcar Inc., based in Washington, D.C.

      Suddenly though, big players, including Hertz Corp., Enterprise Rent-A-Car Co., and U-Haul International Inc., are seeing the merits of marketing car rentals by the hour. Phoenix-based U-Haul has the most aggressive plans. This spring, it will add more cars to its small pilot fleet and introduce technology that mimics Zipcar's, allowing customers to reserve cars online and get into them with a card.

      Car sharing finally seems to be gaining speed. Initially, the idea of "members" paying an annual fee to rent cars on-demand was dismissed as a European concept that wouldn't appeal to Americans. But it's starting to seem like big business: Zipcar chief executive Scott Griffith has been talking about hitting $1 billion in revenues within a few years, sounding very much like a CEO gearing up for an initial public offering.

      After five months of absorbing its biggest competitor, Zipcar faces the task of competing against companies with well- known brands, strong supplier relationships, and staying power.

      "U-Haul and Enterprise could be serious competitors, if they jumped into the market big time," says Dave Brook, a consultant who earlier founded CarSharing Portland, which Flexcar absorbed. (With Zipcar's acquisition of Flexcar, Brook holds a small chunk of Zipcar stock.)

      "They've got big networks already in place across the country, and they will have an advantage in that they have a better supply chain - which includes better access to vehicles," he says.

      Hertz and Enterprise, so far, seem comically inept as they enter the business of hourly rentals. (Disclosure: I've been a Zipcar member since last year.) Finding out how to rent a car by the hour at Hertz's Park Plaza location entailed a call to a Hertz spokesperson, who explained how to find it on the company's website. Hertz started offering rentals at $12 to $15 an hour in September at one Boston location, and manager of public affairs Paula Rivera says it is still in "a test mode."

      Enterprise has been most aggressive so far with car sharing in St. Louis, launching a service there called WeCar. Enterprise public relations manager Lisa Martini says that WeCar is "something Enterprise is interested in bringing into other markets, and Boston is certainly one of those markets that we're looking at." For now, hourly car rentals are available at one location, in Prudential Center. And figuring out how to book one, as with Hertz, involves an Internet scavenger hunt.

      U-Haul has made some missteps, too, as it has tried to build a car-sharing business, but it seems to be more eager to get back on track. Cars, which rent for $10 an hour, were initially only available at U-Haul rental centers, which tend to be off the beaten path, and they could be checked out only during hours that the centers were open. The fleet was limited to white PT Cruisers. And while U-Haul on its website promotes the availability of U Car Share at six Boston area locations, when I called the locations, only two said they were participating.

      Michael Coleman, the program manager for U Car Share, explains that the service is being restructured. In a few weeks, U Car Share members will be able to reserve cars online - just like Zipcar - and get access to the vehicle independently. "We'll have a large variety of vehicles," he says, "and we're expanding beyond the rental centers, closer to businesses, universities, and residential areas."

      They'll be targeting the same demographic "sweet spot" as Zipcar: college students and twenty-somethings. "Those are the people willing to give car sharing a chance," Coleman says.

      The new entrants, predicts Zipcar's Griffith, "will have issues with car utilization. This business has a high cost of entry, because you need to get enough cars in enough neighborhoods to compete and make it appealing for people." He tries to put a positive spin on the competition, adding that in cities where Zipcar used to compete with Flexcar, "the awareness and general friendliness to the concept of car sharing goes up. Consumers like choices."

      But Griffith does acknowledge that competition can force companies into price wars and increase the costs of acquiring both customers and the top parking spots.

      He says that Enterprise and Hertz will probably tip-toe toward hourly rentals, for fear of cannibalizing their full-day rental rates. (Right now, Hertz and Enterprise don't charge an annual fee to use their hourly rentals; Zipcar and U-Haul both charge members $50 per year, plus an initiation fee.)

      The shift to self-service could also prove tough, says Dave Brook. "The car rental companies are used to seeing the customer," he says. "Car sharing requires a different mindset than car rental, and that could be a corporate culture issue."

      Griffith says Zipcar will try to stay ahead of its competitors by introducing technologies, such as a service that allows cars to be located and reserved from a cellphone.

      A new vexation, though, is rising gas prices, which Griffith says could cause Zipcar to increase hourly rates by 3 to 5 percent.

      Zipcar member Jonathan Tompkins says he uses a vehicle twice a month for snowboarding trips or runs to Home Depot. "If you're spending $60 a month for Zipcar, that's probably about a third of the payment you'd be making on a car - without factoring in gas and insurance," he says.

      Tompkins, who lives in the South End, says a friend mentioned U Car Share recently. And while he isn't planning to abandon Zipcar, he says, "I'd be curious to check it out, and find out more about how it compares."

      That sort of curiosity will keep Zipcar on its toes.

      Innovation Economy is a weekly column focusing on entrepreneurship, technology, and venture capital in New England. Scott Kirsner can be reached at kirsner@pobox. com.



      -- 
      --------------------------------------------
      
      Todd Edelman
      Director
      Green Idea Factory
      
      Korunni 72
      CZ-10100 Praha 10
      Czech Republic
      
      Skype: toddedelman
      ++420 605 915 970
      ++420 222 517 832
      
      edelman@...
      http://greenideafactory.blogspot.com/
      www.flickr.com/photos/edelman
      
      Green Idea Factory is a member of World Carfree Network
      www.worldcarfree.net
      
      CAR is over. If you WANT it.
    • Steve Cousins
      Guys - the big challenge is to reduce overheads so that the efficiencies gained through shared use of vehicles are not lost in the inefficiencies of
      Message 2 of 5 , Apr 3, 2008
        Guys - the big challenge is to reduce overheads so that the efficiencies gained through shared use of vehicles are not lost in the inefficiencies of administering car ownership.  The danger is that the big boys could be very good at this.  On the other hand they may not and the stimulus of the challenge will improve the offerings from 'the good guys'.  Rates could be halved as an objective of the new challenge - thereby reaching the mainstream.
         
        Steve Cousins
         
        ----- Original Message -----
        Sent: Tuesday, April 01, 2008 6:53 PM
        Subject: Re: [NewMobilityCafe] Warning to Zipcar: Traffic ahead - The Boston Globe

        Hi,

        This main-streaming of carshare is a good thing. Some thoughts, questions:

        * Will the buying power of these bigger players encourage the creation of "softer" cars - with active pedestrian protection, doors that don't open into cyclists and so on? I hope they can take advantage of economy of scale to get carmakers to do things differently. Zero tailpipe emission carshare cars would be great as well.

        * Now that these old-fashioned businesses are literally buying into New Mobility, I wonder if they will also take an interest in underwriting some public bicycle operations.. .

        * For those of use who mainly see carshare more as a step in the right direction for cities, rather than as a long-term solution, I wonder how we can take advantage of these latest developments to educate the mainstream about the things we discuss on these lists. I know that... I suppose we can say "classic carshare" people are already thinking green, so I wonder if many of the people who used carshare branded by these old stalwarts will end up being more conservative types.

        - T

        Dave@.... cz wrote:

        Kind thanks to Dave Brooks for the heads-up.

         ____________ _________ _______

        Interesting read about Hertz, Enterprise and U Haul.  

        Zipcar CEO Scott Griffith: Innovation Economy video Zipcar CEO Scott Griffith explains how the company's car access technology works.

        Innovation Economy

        <!--[if !vml]-->The Boston Globe<!--[endif]-->

        Warning to Zipcar: Traffic ahead

        March 30, 2008

        Zipcar Inc. may have finally woken the dozing giants of car rental.

        more stories like this

        Since Cambridge-based Zipcar got started in 1999, it has attracted a loyal customer base by re-imagining the concept of car rental.

        Cars are sprinkled throughout city neighborhoods. And there's never any paperwork or standing in line required to borrow one: just wave a membership card over the windshield, and the doors pop open. Seconds later, you drive off in a Mini Cooper, Ford Escape, or BMW sedan. Gas and insurance are included in the hourly rate, which hovers around $10.

        With a fleet of 5,000 vehicles parked in cities such as London, San Francisco, and Boston, and 180,000 members, Zipcar claims to be the world's largest car-sharing service. Last fall, Zipcar took over its only significant US competitor, Flexcar Inc., based in Washington, D.C.

        Suddenly though, big players, including Hertz Corp., Enterprise Rent-A-Car Co., and U-Haul International Inc., are seeing the merits of marketing car rentals by the hour. Phoenix-based U-Haul has the most aggressive plans. This spring, it will add more cars to its small pilot fleet and introduce technology that mimics Zipcar's, allowing customers to reserve cars online and get into them with a card.

        Car sharing finally seems to be gaining speed. Initially, the idea of "members" paying an annual fee to rent cars on-demand was dismissed as a European concept that wouldn't appeal to Americans. But it's starting to seem like big business: Zipcar chief executive Scott Griffith has been talking about hitting $1 billion in revenues within a few years, sounding very much like a CEO gearing up for an initial public offering.

        After five months of absorbing its biggest competitor, Zipcar faces the task of competing against companies with well- known brands, strong supplier relationships, and staying power.

        "U-Haul and Enterprise could be serious competitors, if they jumped into the market big time," says Dave Brook, a consultant who earlier founded CarSharing Portland, which Flexcar absorbed. (With Zipcar's acquisition of Flexcar, Brook holds a small chunk of Zipcar stock.)

        "They've got big networks already in place across the country, and they will have an advantage in that they have a better supply chain - which includes better access to vehicles," he says.

        Hertz and Enterprise, so far, seem comically inept as they enter the business of hourly rentals. (Disclosure: I've been a Zipcar member since last year.) Finding out how to rent a car by the hour at Hertz's Park Plaza location entailed a call to a Hertz spokesperson, who explained how to find it on the company's website. Hertz started offering rentals at $12 to $15 an hour in September at one Boston location, and manager of public affairs Paula Rivera says it is still in "a test mode."

        Enterprise has been most aggressive so far with car sharing in St. Louis, launching a service there called WeCar. Enterprise public relations manager Lisa Martini says that WeCar is "something Enterprise is interested in bringing into other markets, and Boston is certainly one of those markets that we're looking at." For now, hourly car rentals are available at one location, in Prudential Center. And figuring out how to book one, as with Hertz, involves an Internet scavenger hunt.

        U-Haul has made some missteps, too, as it has tried to build a car-sharing business, but it seems to be more eager to get back on track. Cars, which rent for $10 an hour, were initially only available at U-Haul rental centers, which tend to be off the beaten path, and they could be checked out only during hours that the centers were open. The fleet was limited to white PT Cruisers. And while U-Haul on its website promotes the availability of U Car Share at six Boston area locations, when I called the locations, only two said they were participating.

        Michael Coleman, the program manager for U Car Share, explains that the service is being restructured. In a few weeks, U Car Share members will be able to reserve cars online - just like Zipcar - and get access to the vehicle independently. "We'll have a large variety of vehicles," he says, "and we're expanding beyond the rental centers, closer to businesses, universities, and residential areas."

        They'll be targeting the same demographic "sweet spot" as Zipcar: college students and twenty-somethings. "Those are the people willing to give car sharing a chance," Coleman says.

        The new entrants, predicts Zipcar's Griffith, "will have issues with car utilization. This business has a high cost of entry, because you need to get enough cars in enough neighborhoods to compete and make it appealing for people." He tries to put a positive spin on the competition, adding that in cities where Zipcar used to compete with Flexcar, "the awareness and general friendliness to the concept of car sharing goes up. Consumers like choices."

        But Griffith does acknowledge that competition can force companies into price wars and increase the costs of acquiring both customers and the top parking spots.

        He says that Enterprise and Hertz will probably tip-toe toward hourly rentals, for fear of cannibalizing their full-day rental rates. (Right now, Hertz and Enterprise don't charge an annual fee to use their hourly rentals; Zipcar and U-Haul both charge members $50 per year, plus an initiation fee.)

        The shift to self-service could also prove tough, says Dave Brook. "The car rental companies are used to seeing the customer," he says. "Car sharing requires a different mindset than car rental, and that could be a corporate culture issue."

        Griffith says Zipcar will try to stay ahead of its competitors by introducing technologies, such as a service that allows cars to be located and reserved from a cellphone.

        A new vexation, though, is rising gas prices, which Griffith says could cause Zipcar to increase hourly rates by 3 to 5 percent.

        Zipcar member Jonathan Tompkins says he uses a vehicle twice a month for snowboarding trips or runs to Home Depot. "If you're spending $60 a month for Zipcar, that's probably about a third of the payment you'd be making on a car - without factoring in gas and insurance," he says.

        Tompkins, who lives in the South End, says a friend mentioned U Car Share recently. And while he isn't planning to abandon Zipcar, he says, "I'd be curious to check it out, and find out more about how it compares."

        That sort of curiosity will keep Zipcar on its toes.

        Innovation Economy is a weekly column focusing on entrepreneurship, technology, and venture capital in New England. Scott Kirsner can be reached at kirsner@pobox. com.



        -- 
        ------------ --------- --------- --------- -----
        
        Todd Edelman
        Director
        Green Idea Factory
        
        Korunni 72
        CZ-10100 Praha 10
        Czech Republic
        
        Skype: toddedelman
        ++420 605 915 970
        ++420 222 517 832
        
        edelman@greenidea. eu
        http://greenideafac tory.blogspot. com/
        www.flickr.com/ photos/edelman
        
        Green Idea Factory is a member of World Carfree Network
        www.worldcarfree. net
        
        CAR is over. If you WANT it.

      • Chris Bradshaw
        ... This is a worthy hope, but don t expect it in the short-run. Taxis were all purpose built until the 1970s (the Checker Car Company hung on til the early
        Message 3 of 5 , Apr 4, 2008
          > * Will the buying power of these bigger players encourage the creation of
          > "softer" cars - with active pedestrian protection, doors that don't open
          > into cyclists and so on? I hope they can take advantage of economy of
          > scale to get carmakers to do things differently. Zero tailpipe emission
          > carshare cars would be great as well.

          This is a worthy hope, but don't expect it in the short-run. Taxis were all
          purpose built until the 1970s (the Checker Car Company hung on til the early
          1980s), thanks to the manufacturers not being able to adapt to crash and
          emissions standards. We lost the larger interiors and jump seats for
          extra-large groups (kids especially liked sitting in them).

          Carsharing makes possible people will pick different cars for different
          trips, rather than the private-car regime which forces people to limit
          themselves to a car that fits _all_ their trips. Since a high % of trips
          are within the city on roads with moderate speed limits, there is no reason
          carsharing should not contract with car-manufacturers to produce such a car,
          which will be smaller, lighter, lower (to see over), and of course less
          polluting. Since such cars don't need as much _defensive_ crash protection,
          it can focus its exterior on improving its _offensive_ crash protection,
          e.g., the soft exteriors. Also, for the cyclists, doors can be sliding one,
          like the Mazda 5 has put on their rear doors (already standard on larger
          "mini" vans), which could be used to replace the front doors, but would
          require those doors to slide _forward_ somehow.

          > * Now that these old-fashioned businesses are literally buying into New
          > Mobility, I wonder if they will also take an interest in underwriting some
          > public bicycle operations...

          I agree. It is too bad the shared-bike programs are run by advertisers,
          rather than transportation people. A single membership should cover both
          shared cars and shared bikes, and serve as a fare card for transit, a credit
          card for taxi and parking, and ID for hitchhiking.

          > * For those of use who mainly see carshare more as a step in the right
          > direction for cities, rather than as a long-term solution, I wonder how we
          > can take advantage of these latest developments to educate the mainstream
          > about the things we discuss on these lists. I know that... I suppose we
          > can say "classic carshare" people are already thinking green, so I wonder
          > if many of the people who used carshare branded by these old stalwarts
          > will end up being more conservative types.

          The use of carsharing _is_ an education of basic principles. Whereas a
          car-owner is looking to maximize his driving (80% fixed costs, 20%
          variable), the carshare person is trying to reduce his driving (5% fixed,
          95% variable costs). This makes carsharers natural location-efficiency
          maximizers, in their personal decision making (where to work, live, and the
          planning of destinations) and in the way they shop and use their political
          clout (e.g., pushing for more, not less commercial development in their
          neighbourhood; demanding more, not less transit on their main street).

          Chris Bradshaw
          Ottawa
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