November 1, 2007
Zipcar, Flexcar Announce Merger
Zipcar and Flexcar, D.C.'s two most popular car-sharing companies, announced they are merging Wednesday. Emails to customers of both companies directed them to an announcement on Zipcar's website.
"The combined company will provide our members with increased benefits and improve our ability to expand into new markets," said Zipcar CEO Scott Griffith in the statement.
The new company will operate under the Zipcar name, and while the pricing plans are still being hammered out, they will use FlexcarZipcar’s higher maximum 180 free miles per day, and will charge an hourly rate of around $10-$11, explained Mark Norman, former Flexcar CEO and now president and COO of Zipcar. Insurance limits will also be increased to $300,000 per accident, as opposed to state minimums.
In a conference call with the press on Wednesday, Griffith and Norman addressed a number of issues related to how this will affect the D.C. area specifically. D.C. and San Francisco are the only two markets in which Zipcar and Flexcar compete heavily.
Here's what you need to know: Between now and the end of January, Flexcar customers will receive new Zipcards in the mail. There will be a transition period where some Flexcars will still be on the road before being converted into Zipcars, and will still have to be reserved on the Flexcar site. As Flexcars are outfitted with Zipcar technology, they will be transferred to the Zipcar web site, until eventually all customers will use Zipcar exclusively.
As for how many cars that will mean for the D.C. area, Griffith estimates that the company holds "more than 600 cars [in Greater Washington] together going forward." He also said, however, that Zipcar is always measuring supply and demand and moving cars around in the natural course of doing business, so it's possible there could be some change in that number after the initial transition allows the company to discover whether there are redundant vehicles in specific locations in the D.C. market.
The Washington Business Journal has more.
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This is bad news. Lack of competition almost always causes increased prices and decreased customer service in the end.
Zipcar went to 180 free miles per day several months ago.
One benefit of the merger is that the city will now be able to give single on-street parking spots to the combined company. When they were competing, it seemed like the city didn't want to be accused of favoritism, so the choice was always zero or two on-street spots. Since the city can now give away single on-street spots without triggering a dispute between the companies, we may see more on-street cars in the future.
I love how Zipcar's minimum per hour started at $7, then moved to $9, and is now moving to $10-11. So, that's a 50 percent increase in what, 3 years?
Having more cars and location to choose from might be nice, but I'm concerned about price. I'm a Flexcar member now and I chose based primarily on the pricing plan that makes it really affordable for someone who uses the service only once in a while.
For Comparison:
Flexcar charges me $10 a month and I get the first three hours free. Around $8 an hour after that.
Zipcar's bare bones plan starts at $50 a month and the hourly rate is just deducted from that $50 until you go over then you're charged the hourly.
So if I use it four hours a month, it would be around $18 for Flex and $50 for Zip. I think I'm about to get hosed.
ZGoos - there's a $50 annual fee at Zipcar, not monthly.
I agree. The math is starting to make less and less sense...
It was already too expensive for a weekend trip (you can get better rates from a regular rental company, even accounting for gas and insurance) and with another ratcheting up of the basic hourly rental, I'm less and less inclined to share cars.
This sucks. As a Flexcar user you can get cars starting at $5/hr. Zipcar is usually twice as much, and having eliminated their main competition, there will be no reason for them to give future price breaks. :( I've really enjoyed using Flexcar in lieu of owning a vehicle, but perhaps now it's time to start thinking about ownership...
TheTim - Actually, Zipcar has a couple of plans. If you're a frequent user, you can pay $50/month (or more, depending on the plan) and no annual fee. You get discount hourly rates once you use up your $50 allotment. Or, you can pay $50/yr, no monthly commitment at rates starting at $9/month.
Is it really going up to $10-$11? Kinda sucks.
Since the combined company expects to turn a profit within a year, I'm cautiously optimistic. I won't be surprised at all if they reduce the number of cars in DC, but I wouldn't expect them to reduce the numbers by much, since both companies claimed to be profitable in individual markets where they'd been established for two years or so. If they were each profitable with that many cars, there's no reason the combined company couldn't manage to make a profit, especially considering lower average operating costs. I assume they'll do a bit of shuffling to match demand, but I'd be very surprised by a big decrease in micro-level availability.
On a personal level I'm slightly disappointed, because I'm already a Flexcar member and planned on taking advantage of a well-timed signup with Zipcar to get some free driving in London this December. So much for that idea.
I hope the combined DC office holds on to Flexcar's Melissa Esposito, though, since she's been very helpful every time we've had to deal with Flexcar for billing or operational issues. I won't miss the on-call service guy, though. He's a jerk.
A lot of us have memberships to both...any word on how that will work?
The press release didn't say anything about price increases. It would be very distasteful if the first act they did as a new monopoly was to raise prices.
When I started driving gas was $0.99 /gallon.
(lived in the suburbs of VA)
...ten years later it's $2.75 /gallon.
(live in the district)
Prices just go up over time. Personally, I am over vehicle ownership.
..I would be interested to know how many people from suburban areas outside the city use Zipcar/Flexcar.
Where do you live?
Where do you Zip or Flex to?
I think that the cost effectiveness when you're a district resident makes sense, but am not so sure it would in MD/VA.
Zipcar's hourly rate has gone up as gas prices have gone up. My household still spends far less on Zipcar than we would on gas, parking, insurance, and car payments if we owned a car.
As for comparing Zipcar to rental car companies, I've found the free gas often makes Zipcar cheaper. Even if it weren't, I'd be happy to pay a few extra dollars to have a nice car that I can pick up outside my building with no hassle.
Well at least the insurance coverage is going up. As it stood before, the liability was the state minimum..so if you were in DC and somehow totalled someone else's car, unless it was kia rio, you were probably going to have pay alot of money out of pocket.
Plus, most of the flexcar's in DC are crappy cars: boring-a$$ Honda Civics.
If you want a way to save money on Zipcar, the pickup trucks are only lke $6/hour on weekdays..if you don't mind tooling around town in a Japanese truck that is...
I have it on very good authority that the concerns many of you are expressing about post-merger pricing are unfounded.
Reliable sources have told me that ZipCar does not plan to raise rates for DC in the foreseeable future. The current ZipCar pricing plan will remain in effect for as long as it would have anyway, and will not be affected by the merger. Mark Norman's comment about $11-12/hour was made either in error or in reference to another, non-DC market. Also, the impetus for the "merger" was that FlexCar was unprofitable and insolvent; had it not been for the merger FlexCar would have failed completely. This way, at least the FlexCar cars and parking spaces don't disappear; that definitely would have been worse for everyone.
I hope this info clears some things up.
"I love how Zipcar's minimum per hour started at $7, then moved to $9, and is now moving to $10-11. So, that's a 50 percent increase in what, 3 years?"
It's more like 5 years, and (as noted by others) the price of gas increased a lot during those 5 years. And Zipcar has plenty of cars that are still $9.00/hour. (Also, the company has had no competition in any of its markets except for DC and SF, and it charges the same rates in other cities as it charges in DC, even in those cities where it enjoyed a monopoly, so I think it's premature to predict rate increases here.)
And it's true that Zipcar doesn't make sense for a weekend rental -- but it was never intended for that. And at least once the merger is completed, I can go to any of the current Flexcar cities and use a Zipcar.
You'd be surprised. I priced Flexcar vs. a rental car recently for a weekend trip, taking into account everything I could think of (base rates, insurance, gas, mileage limits), and after extensive math, it came out to be practically the same. Now the rental agency was an in-town one, 'cause I'm not interested in trekking out to the airport to rent the car. But in the end I went with the Flexcar - it's a brand-new car and a nicer model than whatever American sedan the rental place would have given me.