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Avis Picks Up Zipcar as Naysayers Take Aim at Deal

Posted by Dale Buss on January 2, 2013 03:45 PM

For a long time, Avis played second fiddle to Hertz in the rental-car business and became known for its brand credo, "We try harder." Lately, Avis has been No. 3 in sales in the car-rental business to Enterprise and Hertz. 

But now, Avis is leapfrogging the competition and is becoming No. 1 in the fastest-growing arena of the rental-transportation industry: fleet-sharing. Avis Budget Group announced on Monday that it is acquiring Zipcar, the leading brand in the fledgling segment, for $12.25 per share or about $500 million.

The deal allows Avis to participate robustly in the car-sharing phenom while boosting Zipcar with more resources and rides. Advancing its mission of "Wheels when you want them," Zipcar execs say they welcome the Avis fleet to help out with availability on weekends, when demand from Zipcar members is highest — and Avis isn't serving the strong business weekday demand.

Already, naysayers are predicting that Avis will "ruin" Zipcar. Not a chance, argues Avis.

"By combining with Zipcar, we significantly increase our growth potential, both in the United States and internationally, and will position our company to better serve a greater variety of consumer and commercial transportation needs," stated Avis CEO Ronald Nelson. "We see car sharing as highly complementary to traditional car rental" and "representing a scalable opportunity for us as a combined company."

As for Zipcar, says CEO Scott Griffith — who is staying on — "we will be well positioned to accelerate enhancements to the Zipcar member experience with more offers and additional services as well as an expanded network of locations."

Over the third quarter, Zipcar members, its renters, grew 18 percent to more than 767,000. With growth like that, Avis management won't necessarily have to "try harder" with Zipcar — just stay out of the way.

The Avis/Zipcar deal also puts Hertz, with its Hertz on Demand service, and GM's deal with RelayRides, among other competitors, on notice.

[Image via Avis/Facebook]

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