Hertz Takes Aim at Zipcar

Hertz has launched Connect by Hertz, the first global car-sharing club offered by an international car rental company. The move puts pressure on Zipcar, currently the leader in self-service pay-as-you-go car rental services. After eight years in operation, Zipcar has yet to become profitable—despite building revenue to approximately $100 million. Zipcar recently bought Flexcar, previously its biggest rival.

Hertz will launch its car sharing service in New York, where it has an existing fleet of 40,000 rental vehicles—about seven or eight times as many as Zipcar offers. Hertz will also launch in Paris and London, where car sharing is more popular than in US cities.

The rental company will borrow a page out of Zipcar’s playbook by offering green and urban-oriented cars like the Toyota Prius and Mini Cooper. About two thirds of Zipcar’s 250,000 members are under 35.

Hertz will provide stiff competition to Zipcar. Not only are all Hertz cars equipped with iPod-ready sound systems and navigation systems, the company beats Zipcar on price. After a customer has paid the $50 monthly fee, he or she can book a Prius for just $8.50 an hour or $59.50 a day, a Camry for $10.20 an hour or a Mini Cooper for $11.90 an hour. Those fees cover all expenses, including gas, insurance, and clean-up. Upon making a reservation, members receive an email confirmation as well as a text message indicating the reserved car’s license plate and location. To unlock and engage the vehicle, members simply need to swipe their membership card over the car’s radio-frequency identification reader.

Enterprise and U-Haul are also exploring short-term urban car sharing services.

The big question is if enough US drivers will opt for car sharing over private car ownership. Susan Shaheen, a transportation researcher at the University of California at Berkeley, believes the US market could reach 2 million car sharers. The fight for that limited market is now set between Zipcar, big companies like Hertz, and local niche players like City CarShare in San Francisco, a non-profit. “We’re certainly sitting up and noticing what other competitors are doing,” said Zipcar’s chief executive, Scott Griffith, in an interview with the New York Times. But “this is Hertz car sharing 1.0 and we’re at Zipcar 8.0.”

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  • Bryce

    I have used zip car several time before to move stuff from my dorm to a girlfriends apartment for the summer and then back to my new house in Berkeley. It was very handy for this purpose, but as the article noted, it is mostly used by people under 35 who are without access to cars. (ie students like me) Beyond this and the occasional outting, I don’t see this becoming someones main mode of transportation. And to be honest, they are too expensive. For a weeks use, I could pay a car payment, insurance, and gas for my own car, and at the end of the day….a.ctually own a car….lol. So unless someone is using it once or twice a year like me, it isn’t very economical. Take it from someone who has actually used them.

  • David Long

    I’m glad this is at least an option for some people. Doesn’t work for me, unfortunately. $50/mo fee plus $60/day for a Prius isn’t practical against my $250/mo payment and $80/mo insurance for my Camry (which I bought used with no money down). At 5 days ‘rental’ I end up paying more for the Prius. But, then, I live in a more rural area with reasonably low insurance rates.

  • Anonymous

    I think you guys are missing the point of carsharing. It’s not intended to replace your car on a daily basis, and will never be cost-effective if that’s how you compare it. If you need a car for your daily commute, you should just buy one. But we belong to a Zipcar-like service (local nonprofit version) as our “second car.” We do full-day rentals maybe twice a year for $50 a pop, and then do several dozen 2-3 hour rentals (~$15 each) over the course of the year for errands, etc., when our first car is in use or when we’re somewhere other than close to home. (I can pick up a carshare car at a train station, for instance, or near my office.) That makes it waaaaay cheaper than paying for insurance and maintenance on a second car, even if it were paid off entirely. (Of course, our service only charges $10 a month to Hertz’s $50, which makes it a much better deal.) As a bonus, we can choose the type of car based on the errand—pickup truck for Ikea runs; hatchback for groceries; wagon if carseats and strollers are involved.

    And for what it’s worth, we’re not in the “under 35 student” category, either. We just happen to live in a streetcar suburb where we have good public transportation options, so there’s simply no need to be a two-car family.

  • AnneS

    Like the anonymous user above points out, car sharing is way cheaper than owning a car IF you don’t need to use it every day. City Car Share makes it even cheaper, just $10/month and $5 per hour. It usually came to about $55/month for us. That’s total!

    Compare that to when we bought a new Honda Accord in 2002. Our costs were:

    $400/month loan payoff
    $200/month insurance (new car in an urban area? Yikes!!!)
    $200/month garage rental

    So we have $800 versus $55.

    Now, granted, car sharing isn’t as convenient as hopping in your own car on a whim, BUT because of that, we really reduced extraneous driving trips and instead walked or took the bus. And isn’t that one of the main goals? To reduce energy dependence and fuel emissions?

    From that perspective, car sharing wins hands down every time.

    P.S. (Right now City Car Share has a $0/month trial going on, so it is a good time to check it out.)

  • Peter

    I live in Brooklyn, New York, where almost nobody commutes by car. I owned a car eight years ago, but that’s only because I got it for free. Even then, insurance in NYC for my old beater was $200/month. Eventually that car died, and even though I don’t need a car to live in NYC, it’s nice to have one, and I was considering buying one when I discovered Zipcar. This totally eliminated my need to own a car.
    I’ve been a member since 2003. I use it about once a month for a 24-hr trip, which runs around $125, and occasional 3-4 hour trips at around $10/hr for errands or to buy furniture or for a date. The day rate is actually quite competitive for NYC if you take into account the fact that gas & insurance is included, and EZ Pass, which gets charged to your account.
    The Hertz offering looks good, but they only have something like four garages in NYC as compared to probably a couple hundred for Zipcar, three of which are a few blocks from my apartment. I’m glad Hertz joined the field, because competition’s always good.

  • Bryce

    This is good though of course, even though these things are only good for those that have limited use for them (myself as a student and urbanites….as well…urbanites) this niche is conveniently filled. I am happy for the little zipcars……though after college, I am definetly going to be using my own car. Thanks zipcar for the few good years.

  • Jon

    What about GAS! You all seem to be missing the fact that the hourly and daily rates from Hertz include gas…. and maintenance, etc…

    I don’t see these services though expanding that much simply because they rely to heavily on a public transportation infrastructure to get you to the car in the first place. So once all the urban centers are covered… then what?

  • DivP

    If you drive to work, you need to buy a car. ZipCar is simply not designed, intended or conceptualized for that situation. It has been perfect for me though. In 2006 my employer set me up to work from home full time (a corporate trend which will continue into the future). My wife walks to college. Since we live in the city close to downtown Boston, the only things we needed a car for was for groceries, socializing and road trips. We order groceries from peapod.com.. so that left the other 2. Our Jetta was $326 + 245 insurance + 250 parking + 100 gas and 100 maintainance (amortized). I calculated that even if we rented every weekend .. it would cost us half as much. So we sold our beloved Jetta and have lived off Zipcars for the past 18 months. Best decision we ever made. Our apartement has 8 zipcars in the garage so we just take the elevator down and instead of taking our own car… its a zip car. We love trying out new cars everytime. The best part is once we are done with visting friends and come back and lock the car… no maintainance or payments to worry about!

  • Erik

    My wife and I started using Zipcar in Seattle in early 2007. After a 4 month trial, we sold our only car in October 2007. We banked the $5,000 (4% interest = $200/yr) no longer tied up in owning our older BMW, which we did not finance but paid insurance, gas, and maintenance for. We have also saved over $400/month using Zipcar, car-pooling, city bus, taxis, bikes, and trains for over a year now.

    We got to use $10,000 on other things by not owning a car for one year.
    We will likely save another $5,000 in 2009.

    Once we learned how much money we would save using the 4 Zipcars within 1-4 blocks of our place, we understood that owning a car is a far more inefficient use of our hard earned pay than renting Zipcars by the hour. Owning a car is paying in advance for transportation whether we end up needing it or not. We tend to use an owned car more because we have narrowed our options by prepaying and want to get our money’s worth.

    Zipcar is an option that gives us flexibility to ask “do we want to pay $30 to use a car for 3 hrs + $10 parking to see a movie downtown, or shall we take the bus, or ride bikes and save that $40 for a rainy day?” Most of the time, cars just sit there not being used. We are no longer willing to pay for NOT USING a car.

    Look at all the cars parked anywhere you go. Think of the people paying for them to just sit there. The average car is driven 12,000-15,000 miles a year in the USA. The average car is owned for 8760 hours each year but only driven 400-500 hours a year (200-250 hrs/yr if you use average travel speed of 60mph instead of 30mph). 95% or more of the average car’s time owned is spent NOT DRIVING. The average Zipcar replaces 15 owned cars.

    We drive about 10% of the miles we used to drive. We have access to new Toyota and Honda Hybrids, Subarus with All Wheel Drive, BMWs, Volvos, Mini Coopers, Convertables, Mini-Vans, SUVs and Pickup trucks. We can use Zipcars in citys all over the USA, Canada, and London. If we each need a car at the same time we can each get our own Zipcar. We never need to visit the mechanic again, either. All this convenience for $5,000 LESS per year than owning and maintaining our sweet, old BMW.

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  • o reginald kluttar

    This field has expanded to include the not-for-profits, as well as ZC, Hertz and UHaul, but has been used for years previous with European and Asian bases. They merely lagged with the US because they did not trust the consumers to use, and not abuse, the vehicles. But their purely income-driven tactics are on a par with the conditions that predicate them as a need. Because they use petrol fuel or hybrid, they are never going to get beyond being an urban phenomenon. So they are part of over-building of high-rises, and the relentless over-burdening of urban systems – particularly waste, traffic and potable water supply. When the technology produces an alternative to the I.C.E., the consumers will return to the individual proprietorship and the urban systems will be upgraded to not need these sort of rides.

    Phone up the indy companies yourself, if you don’t believe that. Talk to the rep there. Not to the CEO, as they seem to be genuinely above their rank-and-file. But you’ll get that officious, thrice-removed attitude from the reps at ZC as most likely with others; they don’t want you to ask them a lot of questions. Money makes their world go round, not their Lease-A-Rides.

  • Angel

    Nice! This is a nice Zipcar. Really its so nice and colorful. Last week I rode this car. Really it’s awesome. I like it very much. I wanna buy this car. May I know the details info about this Zipcar?
    Seattle Limo