Avis Budget's Zipcar Expansion on a Roll, Enters Palo Alto - Analyst Blog

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Avis Budget Group, Inc. 's ( CAR ) wholly owned subsidiary, Zipcar, has recently collaborated with the city of Palo Alto to launch its car sharing services in the city. Further, the company plans to introduce 10 Zipcars in the city's four parking facilities located within the confines of the Downtown Parking Assessment District.

Members in the Palo Alto city are charged at rates which start from $8.50 per hour and $74 per day. Moreover, the company provides an extensive range of models such as Volkswagen Passat, fuel-friendly Toyota Prius Hybrid, and Hyundai Elantra, to name a few. With this cost-friendly mode of transport, Palo Alto residents will be able to lessen traffic, limit carbon emissions and address parking problems.

Interestingly, Zipcar already owns over 50 cars in the Stanford University campus, which is adjacent to the city. Notably, the company has gained significant popularity since it forayed into Stanford in 2011, which is evident from its solid membership at the campus. Meanwhile, its entry into Palo Alto is expected to widen members' reach, enhance customer convenience and add to the company's customer base.

Apart from Stanford, Zipcar has over 1,400 vehicles in the greater Bay Area.

Additionally, Zipcar has a vehicle for Business program, which offers driving rates at discounted prices during weekdays. This benefits the city's local business employees with reduce parking needs and cost savings as well as protects the environment by cutting down carbon emission levels.

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, Internet or apps on Androids and Apple Inc.'s ( AAPL ) iPhone.

Avis Budget, sporting a Zacks Rank #1 (Strong Buy), acquired Zipcar in Jan 2013 for a total value of $500 million. Following the completion of the acquisition, Avis Budget has been aggressively expanding Zipcar's services at various locations. Since the takeover, Avis Budget has expanded Zipcar's presence from 20 to 26 major metropolitan markets.

Most recently, Zipcar declared the addition of a 2014 Honda Fit battery electric vehicle (EV) at The University of California, Davis' (UC Davis), West Village. West Village is the biggest zero net energy region in the U.S., which has been structured in such a way that its energy consumption and generation are equal during a year. The introduction of this all-electric vehicle is likely to take West Village and UC Davis closer to this target.

Considering these factors, we believe that the acquisition of Zipcar has facilitated Avis Budget to diversify its offerings from car rental to car sharing, and compete better with rivals such as United Rentals Inc. ( URI ) and Hertz Global Holdings Inc. ( HTZ ) - which has its own car sharing service, Hertz On Demand.


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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 OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: EV , AAPL , CAR , HTZ , URI

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