Avis Budget Expands Zipcar Services - Analyst Blog


Zipcar Inc., a wholly owned subsidiary of global vehicle rental giant Avis Budget Group Inc . ( CAR ), yesterday announced expansion of its car sharing services in the City of Sacramento, California. This marks Zipcar's 26 th major metropolitan market.

The company is impressed with the growing demand for self-service car rentals in the region. As per Zipcar's expansion plans, the community of Sacramento will be able to avail Zipcar services from today, with an access to nearly 40 vehicles around different convenient locations in the city.

The company has its presence in the state since 2009, when it first started its services on the campus of University of California, Davis. In 2010, it expanded its business in the City of Davis and in 2011 it started offering services to California State University, Sacramento.

However, due to its limited access, the services were available only to the students, faculties and staff, and in other nearby vicinities. The recent development will provide ample opportunity to Sacramento residents to avail Zipcar's all-purpose car sharing services. The company will charge its members $7.50 on an hourly basis or $69.00 for 24 hours.

Avis Budget, which competes with JTH Holding, Inc . ( TAX ), acquired Zipcar in Jan 2013 for a total value of $500 million. Following the completion of acquisition, Avis Budget has been aggressively expanding Zipcar's services at various locations. Since the acquisition, Avis Budget has increased Zipcar's presence from 20 to 26 major metropolitan markets.

In the United States alone, car sharing is currently a lucrative business worth nearly $400 million and is rapidly advancing in other parts of the world. With over 760,000 members, Zipcar now enjoys presence in 26 major cities of the U.S., Canada and Europe.

We believe that the acquisition of Zipcar has facilitated Avis Budget to extend its offerings from car rental to car sharing, and has helped it compete better with rivals such as United Rentals Inc. ( URI ) and Hertz Global Holdings Inc. ( HTZ ). The latter has its own car sharing service, Hertz On Demand.

Zipcar operates a car-sharing network and provides self-service vehicles to members in and around their residences and workplaces. The company's vehicles are available for use through its reservation system accessible by phone, the Internet or wireless mobile devices. Avis Budget currently carries a Zacks Rank #3 (Hold).

AVIS BUDGET GRP (CAR): Free Stock Analysis Report

HERTZ GLBL HLDG (HTZ): Free Stock Analysis Report

JTH HOLDING INC (TAX): Free Stock Analysis Report

UTD RENTALS INC (URI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CAR , HTZ , TAX , URI



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