Zipcar Inc., a wholly owned subsidiary of global vehicle rental giant Avis Budget Group Inc. (CAR), last week announced the expansion of its car sharing services in Madrid, Spain under the Avancar brand. This marks Zipcar’s 30th major metropolitan market.
Acquired by Zipcar in 2011, Avancar has been operating its car-sharing services in Barcelona since 2005. Hence, Zipcar intends to use Avancar’s expertise in this new market.
Zipcar operates a car-sharing network and provides self-service vehicles to members in and around their residence and workplace. The company's vehicles are available for use through its reservation system accessible by phone, Internet or apps on Androids and Apple Inc.’s (AAPL) iPhone. Zipcar, which was founded in 2000, currently operates over 10,000 fleet of vehicle across six countries and has over 870,000 members.
It appears that Avis Budget is determined to utilize the growing demand for self-service car rentals in the European region as evident from the expansion of its Zipcar services across the region. Prior to this, in late September, the company expanded Zipcar’s footprint in France by expanding in Paris.
Avis Budget acquired Zipcar in Jan 2013 for a total value of $500 million. Following the completion of the acquisition, Avis Budget has been aggressively expanding Zipcar’s services at various locations and has increased its presence from 20 to 30 major metropolitan markets.
Considering these factors, we believe that the acquisition of Zipcar has facilitated Avis Budget to diversify its offerings from car rental to car sharing and compete better with rivals such as United Rentals Inc. (URI) and Hertz Global Holdings Inc. (HTZ) – which has its own car sharing service, Hertz On Demand.
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