Zipcar Hops On Peer-to-Peer Sharing

Zipcar (Nasdaq: ZIP  ) wasn't kidding around last week when it told investors that it was keeping a close eye on the emerging peer-to-peer car-sharing trend.

The country's leading traditional auto-sharing company is announcing this morning that it's the lead investor in a $13.7 million financing round for California-based start-up Wheelz.

Wheelz got its start at Stanford last year, and it's expanding to a few other California universities this year. Unlike Zipcar, which provides its 673,000 members with a fleet of thousands of cars that they can rent by the hour, peer-to-peer outfits including Wheelz, Getaround, and market leader RelayRides let actual drivers loan out their cars to other drivers.

Zipcar already has a presence in more than 250 college campuses around the country, and now it has a new way for students and faculty members to drive off on errands or leisure.

Wheelz lets students with parked cars on campus seamlessly rent out their vehicles when they don't need them. The owner gets paid more than enough to offset the extra wear and tear. The renter doesn't have to worry about the heavy tabs and obligations of actual ownership.

General Motors (NYSE: GM  ) validated the craze last year, striking a deal with RelayRides to let all OnStar-equipped vehicles participate in the program without additional hardware being installed. Wheelz and smaller peer-to-peer companies do have to install small hardware for tracking and to let renters unlock the car.

Zipcar isn't the only one buying into Wheelz. A venture capital firm backed by some current and former Ford (NYSE: F  ) bigwigs is also taking a stake in Wheelz. Fontinalis Partners -- an intelligent-transportation investment firm whose founders include Ford Executive Chairman Bill Ford and former head of the automaker's international operations Mark Schulz -- is also participating in this round.

The paparazzi seem to be seeing Ford and Zipcar together a lot these days. Ford struck a deal with Zipcar last year to introduce shiny new Ford models into Zipcar's campus car-sharing program, hoping that the students would take to the rides when they graduate or move off campus and need a car of their own. Get a garage, you two!

Zipcar doesn't necessarily need the peer-to-peer juice at the moment. It's growing just fine in its own niche. Revenue climbed 21% in its latest quarter, and it has come through with better than expected profitability in its first three quarters as a public company. Its nearest car-sharing competitor -- Hertz (NYSE: HTZ  ) -- is a distant second. However, Hertz has been trying to woo Zipsters by offering $75 in driving credits, no annual fees, and one-way rentals to gain market share.

Having a second growth vehicle in its lot is the right thing for Zipcar to do.

Shifting into gear
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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 Zipcar, Ford Motor, 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 (4) | Recommend This Article (8)

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  • Report this Comment On February 22, 2012, at 12:39 PM, dbtuner wrote:

    Rick,

    Get your facts straight. Avis is the largest car sharing company with over 15k cars available now and 25k by June. 3X more than ZIP. Avis targets Corporate users for now but will eventually roll out to their entire fleet. When that happens, bye bye ZIP

  • Report this Comment On February 22, 2012, at 9:08 PM, jameskm03 wrote:

    I'm sure someone will argue with the comparison but this move has a lot in common to Netflix's move away from DVD's to streaming. They innovate to a new way model for consumers and then as the market matures they innovate into the next iteration which turns into the holy grail.

    For Netflix the DVD market is expensive although not as expensive as owning cars is for Zipcar. When, not if, this car sharing market gains major steam in a few years ZipCar will be a run away company.

    Sorry @dbtuner I know how much you like to slam ZipCar everywhere but you'll see.

  • Report this Comment On February 23, 2012, at 4:35 PM, dbtuner wrote:

    Do you know anyone who has made money on a ZIP investment aside from shorts?

    ZIP might be the greatest investment ever, but not at these prices. Maybe after it's gets to $3

  • Report this Comment On February 28, 2012, at 10:15 AM, rentnroll wrote:

    Private carsharing is now also becoming more and more popular in Europe. Some examples of this are WhipCar in Great Britain on http://www.whipcar.com/ and rent-n-roll in Germany on http://www.rent-n-roll.de/ . Nevertheless, promoting p2p carsharing might be a lot easier in countries where ownership of a certain good is not as important as its use. That's one of the reasons the U.S. is the pioneer for Collaborative Consumption.

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