Avis to buy Zipcar car sharing service

Car sharing service Zipcar agreed last week to a sale to Avis Budget Group for about $500 million. The deal puts Avis ahead of its competition in the hourly rental market.

According to the Boston Globe, the market for hourly rental in the US has grown to nearly $400 million and could reach $10 billion in North America, Europe and Asia.

Avis says that the two businesses are complementary, and will be able to deliver synergies across the two operations. Zipcar’s fleet utilisation is low during weekdays but spikes during weekends. Avis, meanwhile, has utilization that peaks during the midweek commercial-travel period and has excess capacity on the weekends. The deal would allow Avis to reduce the number of cars at Zipcar locations during the week, but also to use Avis’s excess weekend inventory to meet Zipcar’s strong weekend demand.

In Australia, Avis’s biggest competitor, Hertz, announced in November that they were launching their own car sharing service, Hertz on Demand. There still seem to be no plans to bring Zipcar to Australia, but Avis’ substantial presence in the marketplace here could see the service introduced off the back of the acquisition.

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