Zipcar is Fleet-Footed

It's been a busy month for Zipcar (Nasdaq: ZIP  ) , and we haven't even gotten to next week's quarterly earnings report.

The country's leading car-sharing service kicked off the month with overseas expansion news. Zipcar completed the additional investment required to take majority control of Spain's Avancar.

Earlier this week Zipcar announced a partnership with the city of Boston to introduce car-sharing principles to the metropolitan city's own fleet of vehicles. FleetHub -- part of Zipcar's grander FastFleet vision -- is a win-win proposition. Zipcar outfits the city-owned cars with the necessary tracking equipment and provides the technology to track usage and allocate vehicles.

Auto underutilization is a problem that doesn't get enough play in the media. How long were you in your car today? Does it make sense that it's just sitting idle at home or your workplace? The popularity of peer-to-peer sharing services including RelayRides and Getaround has stemmed from this opportunity. Now just compound the problem at the public sector level where taxpayer money is at stake, and you can see where applying Zipcar's proven car-sharing principles and technology to a municipal fleet can be huge.

Boston isn't the first city to strike a deal with Zipcar. Washington, D.C., and Chicago are also on board with the company's fleet management technology. Cities save money by running more efficiently. Zipcar leverages its technology as a new revenue stream without having to invest in vehicles.

Zipcar can use the encouraging catalysts. The stock has been stuck in neutral here in the mid-teens for months.

Despite Zipcar's success -- and there that are now more than 650,000 members -- it seems as if it's Zipcar's rivals are hogging all of the headlines. It was Hertz (NYSE: HTZ  ) that did away with annual membership fees for its smaller car-sharing operation, undercutting Zipcar. General Motors (NYSE: GM  ) turned heads when it revealed that all OnStar-equipped cars can now be added seamlessly to RelayRides' inventory. Outside of a deal with Ford (NYSE: F  ) back in September that placed hundreds of new Ford cars into Zipcar's campus car-sharing program (and a reasonable quarterly report in November), Zipcar's been running as quiet as a Prius.

Next week's report may help bring back attention to Zipcar. Analysts see breakeven results, but they're targeting healthy profitability in 2012 on a 21% top-line push.

Zipcar wants to crawl its way out of the teens as badly as your awkward 16-year-old nephew. At least Zipcar has a plan. It just needs to point in the right direction -- and drive.

These are interesting times, as the high costs of auto ownership and urbanization trends continue to play into the car-sharing movement. Zipcar is for real -- and it's driving right at you.

Shifting into gear
Zipcar has had engine problems since being recommended to Rule Breakers subscribers shortly after last year's IPO, but the growth stock newsletter service has identified what it believes is the next rule-breaking multibagger. The report is completely free, so check it out now.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Zipcar and Ford. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

The Motley Fool owns shares of Ford Motor, Zipcar, and Hertz Global Holdings. Motley Fool newsletter services have recommended buying shares of Zipcar, Ford Motor, and General Motors. Motley Fool newsletter services have recommended creating a synthetic long position in Ford Motor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (7) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 09, 2012, at 2:22 PM, Chippy55 wrote:

    So, instead of 15,000 miles per year these vehicles will have 100,000 miles? Stop and go traffic around town requires more oil changes, what about the upholstery, your friends wouldn't get in your car with muddy pants but what one that nobody owns? Who digs the car out when the snowplow buries it? Who changes the flat? Who fixes it when it overheats? If 10 people all take a different vehicle to a mall say, what if there are zero people to "return" it, how do you get the cars back to wherever they are supposed to be, which is where exactly? Fender benders, people getting drunk, what if someone uses it to rob a bank and ditches it? Too many questions, it's like a time share home and we know how many problems they have. This sounds like Liberal pie in the sky nonsense to me.

  • Report this Comment On February 09, 2012, at 4:23 PM, jfreedom wrote:

    It works incredibly well in Ann Arbor and New York City so many professional people have bought in. Car always gets returned or the fee shows up on your credit card

  • Report this Comment On February 09, 2012, at 6:29 PM, dbtuner wrote:

    This is a modern day Pets.com

  • Report this Comment On February 09, 2012, at 7:58 PM, InvestWhatWorks wrote:

    @Chippy55

    It is just a rental car (with a different business model). Your questions aren't too difficult to answer.

    What happens if someone drinks and drives while using a Zipcar? The same thing that happens if someone drinks and drives in any rental car. That person gets arrested.

    What happens when someone gets in a fender bender while using a Zipcar? The same thing that happens when someone gets in a fender bender in any rental car. That's what insurance is for.

    What happens if anybody does anything in a ZIpcar? The same thing that happens with any rental car.

    (I don't own any shares of Zipcar. No skin in this game.)

  • Report this Comment On February 10, 2012, at 10:36 AM, OmegaSD wrote:

    @Chippy55

    You bring up valid concerns, but they're basically all answered on ZipCar's website, which it would have done you well to read before firing off a post. FYI, I'm a ZipCar member in Chicago. I own a car, but still keep my annual membership for my own reasons.

    Firstly, ZipCar does have an application/membership process which checks driving records (for which they charge $25 whether or not approved), so they won't just take someone who already has a history of drunk driving or something like that.

    Secondly, the way ZipCar works, when you rent the car, the cost covers insurance (there are a few levels each member can pay for,, depending on deductible, etc.) and gas (there's a gas card in the car, with instructions on how/when to use it and there are safeguards so someone can't just steal it). This is way cheaper than a traditional rental car.

    Thirdly, as far as accessibility, there are like 400+ cars in Chicago, and the point is, you can pick up and drop off at the same location, and they put them in high-density areas of town. You are required to drop off the car where you pick it up, but for *most* normal people, this really isn't a problem. I'd usually get a car around the corner from my house anyway.

    Lastly, as far as mechanical issues, the company covers them, and if you get to the car and it has a problem, you just have to call, they will get you set up with another car nearby and/or adjust the time/cost for the unfortunate situation. The technology allows them to know how many miles are driven and how any hours, so they can remotely track when it needs an oil change or other service. As far as the mileage, no, it's not going to go from 15,000 to 100,000; the cars aren't ALWAYS used, but it's win-win for those without cars and the company that can supply them on-demand.

    Sure, ZipCar isn't for everyone. But in the places where they are, they make a LOT of sense. I don't own shares yet, but am considering picking some up the next few days if I can, before earnings. I respect your questions, but sometimes, a little research can do wonders rather than spouting off something you don't know about.

  • Report this Comment On February 10, 2012, at 11:28 AM, DJDynamicNC wrote:

    Zipcar has been on my watchlist for some time.

    It's probably about time to take the plunge.

  • Report this Comment On February 10, 2012, at 12:13 PM, stumptownbro wrote:

    @Chippy 55. Users get 180miles/day. However, most users use the car in town for things like running errands, grocery shopping etc. These vehicles can be checked out by the hour and are parked throughout the city. So I would argue that they will add roughly the same amount of miles as a typical city driver who gets out of town occasionally.

    There is a nice MF article below where the author notes that Zipcar has a 98% monthly retention rate and in its mature markets has an Internal Rate of Return of 39-74% on its vehicles.

    http://www.fool.com/investing/general/2011/10/27/zipcar-is-p...

    And of course a lot of FAQ's can be answered here! Zipcar.com

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