Profits absent as Zipcar grows
If Zipcar were available in the city where I live, I'm pretty sure I'd be one of the first to sign up. And the realization that sharing a car is a good idea has struck a lot of people around the country. In fact, Zipcar's membership should hit 300,000 this year, an 80 percent increase compared to 2007 (Zipcar and its main rival Flexcar merged late last year). So why is the Zipcar not making any money? This is the question that BusinessWeek tries to answer in a new article on the car-sharing club and discovers that the numbers are not in Zipcar's favor. The culprit? High gas prices, of course.
BW says that while Zipcar should pull in $100m this year, the red ink will remain, most likley until next year. The one-price format that Zipcar uses means that the company has to eat the higher fuel costs. CEO Scott Griffith told BW that, "I lose sleep at night knowing I'm paying for gas for 225,000 people."
Competition from the traditional car rental companies who now offer hourly rentals and more car-sharing start-ups are also worrisome spots on Zipcar's future. The whole thing is worth a read.
[Source: BusinessWeek]
Reader Comments (Page 1 of 1)
SF 12:50PM (9/02/2008)
I used to have a membership with ZipCar but found the service to be lacking. Almost every time I used a car, the registration had lapsed so I could have gotten a ticket at any time driving around in the car. When I didn't renew, they threatened to sell my "debt" to a credit agency. I don't really understand what debt they thought I owed them.
So, while car sharing is a great idea, the company running the program has to be a good company or else it won't work.
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stevefazek 6:51PM (9/02/2008)
Hello fuel surcharge.
Last time i saw a ZIPcar it was smashed into the back of a H2 and it was driven by some mass hole
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ammca 9:32PM (9/02/2008)
Of course they don't make a profit. They charge low rates, and they buy fancy cars. BMWs, Volvos, Priuses.
If they want to make money and provide cheap simple transportation (which I think is what they're trying to do), they ought to have a fleet of beige Kias with roll-up windows.
Stop trying to be fancy, and you might make some money.
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