Trend Watch: Recession giving Zipcar new appeal
An electronic, digitalized access system allows customers to rent a Zipcar for a few hours or for the whole day, with gas and insurance included in the price. Cars are scattered all over the car-share markets, in areas convenient for customers to pick them up or drop them off. The service is currently offered in more than 50 cities and 100 campuses in North America and the United Kingdom.
Car-sharing: Here to stay?
Now, why did this researcher conclude that Zipcar is not merely a niche-service for college undergrads, but an enduring trend? First, because the U.S. recession has deepened. Extrapolating from current U.S. unemployment data, many more Americans -- perhaps as many as 2 to 3 million more, will not be able to buy a used car, let alone a new car. (The U.S. unemployment rate rose to 9.4 percent in May; the highest level since 1982; the U.S. Labor Department announced Friday.)
Second, even among the employed group, many Americans are belt-tightening. One example is urban citizens, such as residents of New York City, who previously owned cars, but sold them to eliminate costly, full-year expenses for parking and insurance. Zipcar members pay a $50 annual fee, and a $25 application fee. Hourly rates start at $9.25 weekdays and $10.25 weekends. Gas, insurance and 180 free miles are included. Over-mileage rates cost 45 cents or more per mile.
But the clincher for yours truly occurred when Zipcar recruited one decidedly non-moderate-income, non-20-something customer, Fairfield County, Connecticut-based financial advisor and consultant C. Leonard Bauer.
Bauer, a Maserati and Saab owner, decided to rent a Zipcar on a recent weekend trip to Boston, to which he traveled by train. "I was initially opposed, but my Boston friend recommended it. She said I would be pleasantly surprised," Bauer told DailyFinance. "Now, my idea of 'roughing it' car-wise is slipping into a used, BMW 5-series. We leased a Nissan Altima for about 6 hours and probably saved about $50-70 in cab fares or compared to renting a car for the day. I was impressed."
And the Mazerati-accustomed Bauer was impressed by the car's condition. "The car was very clean, fully-functional [Bauer has been known to, shall we say, put a car through its paces], and parked in the shade, which was nice, as it was a warm day," Bauer said.
Zipcar customers are insured by the company's auto insurance policy, but Bauer, who is "insured to the maximum" on his own auto policy, said he would recommend potential customers call their insurance company to make sure they are insured "for driving other vehicles," as a back-up, in the event there are any insurance complications.
Economic Analysis: A sign of the times. Look for more 'share' business models to surface as Americans continue to belt-tighten. Some of these models will have a shot at going public, provided equity markets continue to stabilize in the quarters ahead. From a consumer standpoint, U.S. urban residents in high-cost cities where monthly parking fees are ridiculous (New York, San Francisco, Boston) will find the car-share service most appealing, and the view from here argues that the critical mass in this segment is big enough to propel this business model to higher levels of success.