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Is ZipCar's Acquisition A Sign of the Times for Car Dealerships?

By Eric Miltsch on Jan 3, 2013

 

ZipCar Does the Avis rental car acquisition of ZipZar indicate the start of a potential trend for automotive retailers and how they connect with the next generation? ZipCar is being acquired by Avis for nearly $500 million. But why? What's the play here? 
 
Initial reports indicate Avis will let ZipCar continue operations as a subsidiary. But, with ZipCar only in the US, Canada, the UK, Austria and Spain and a stock dropping faster than the temperature in the northeast, what does Avis really see between the lines here? 
  • Is Avis simply looking for customer acquisition growth from the current ZipCar user base of 750,000+ users worldwide? 
  • Are they looking to convert these users into eventual renters down the road? 
  • Will Avis ramp up ZipCar's fleet from their own inventory?
  • Are they looking to try and sell their vehicles directly to them? 
 
Regardless of their intentions, there are a couple of issues automotive retailers should be aware of:
 
  • More alternatives for younger drivers to access vehicles by keeping them loyal to the Avis brand
  • The concept of ownership is a major factor with younger consumer - ZipCar and Avis could make the process of gaining access to vehicles much easier
Is this a signal for greater ripples within the retail automotive segment? If anything, this should be a sign for automotive marketers to start selling their overall experience, pain-free shopping and ease of ownership to this portion of the car buying population.
 
What do you think, is this the start of a new trend or is this a non-event?

Comments

It's definitely a new trend. I've read tons of data that proves that a growing number of millennials are more interested in an iPad vs. a new car. Car ownership is being viewed as just too costly, and it's not as "cool" as it used to be (especially when other alternatives exist). However, I wouldn't worry too much. The real threat is the self-driving car - after these cars become mainstream, the demand for cars will fall rapidly.

Jan 3, 2013

I feel it is a way for them to reach a customer that they never would get otherwise. My step daughter lived in Manhattan for 5 years, did not own a car, but used ZipCar whenever the need arose. ZipCar's use of technology via mobile was appealing to her. No need to go to the airport or rental location, just tell them where you are at and they direct you the nearest car. The entire transaction was handled via her iPhone. So, it ma be a new trend for older companies who are learning that they have to reach younger consumers for their products in a completely different way.

Jan 3, 2013

Jeremy - I'm fascinated by the concept of ownership today. I remember as a kid wanting to buy a video, a tape or even a record. It was a day long process of organizing a ride to the mall via my parents or a friend's parent; the act of going into a store, buying the item, taking it home - and then "owning" this physical object...it then sat on my shelf, proudly displayed. it's completely different today.

When my son wants to buy music, he clicks a link. Done. When he wants a new game, click - done. Nothing is displayed, other than the hardware that houses all this "stuff" they "own" virtually.

Interesting that you mention the self-driving cars as well. I've read where Larry Page's early vision of these vehicles wasn't necessary to position them as vehicles of convenience for drivers, but rather as the wheelchair of the future. Maybe the next generation will simply prefer convenience and accessibility over ownership & the self-driving vehicles are the ultimate solution - who knows, maybe they'll become self-driving ZipCars:)

Jan 3, 2013

Jeremy - I'm curious how you arrive at your position that the demand for cars will "fall rapidly" when the self driving (aka autonomous) car will enter the mainstream. The other side of your position would suggest that it would be boom for dealers as a radical new transportation option. Further, the feature set of the autonomous car - aka what can I do while I'm not driving - will be the battle ground and keep competition fierce.

I'm not seeing how the demand for individual transportation will fall. Compared to non-autonomous cars, sure the traditional car would be at risk but that's no different than the introduction of any other major advancement. Am I missing something?

As for the original topic - I tend to think that dealers should look at this as another customer segment that might not have been available and work to develop a longer term relationship. The dealer that can position themselves as the solution to individual transportation across a range of consumer segments is going to have a leg up. The lifetime value of the customer is the key.

Jan 4, 2013

I believe it is just one more way to reach a clientele that is slipping through their fingers and living in areas where vehicles are required. Rather than allowing public transportation to get the public's money, they've decided to pay attention to this growing populace. It is a smart acquisition, only because it was a good concept to begin with.

Jan 8, 2013

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