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.”