Zipcar Is a Better Driver Than You Think

Disruptors get disrupted, and that's what many bears believe is happening to Zipcar (Nasdaq: ZIP  ) .

The leading auto-sharing service -- with 709,000 Zipsters renting cars by the hour or day with insurance and gasoline included -- seems to be under attack.

Fellow Fool Jeremy Bowman highlighted the competitive landscape earlier this week.

  • Avis Budget (Nasdaq: CAR  ) has been testing a car-sharing platform with its corporate fleet since last year.
  • Hertz Global (NYSE: HTZ  ) is even closer to Zipcar's turf, slashing its annual fees, offering one-way rentals, and now moving to transition its entire fleet to have Zipcar-like access.
  • Enterprise Holdings -- the company behind Enterprise, National, and Alamo -- acquired Mint Cars On-Demand several weeks ago.
  • Daimler's car2go may lean on smaller Smart Fortwo vehicles for its fleet, but its flexibility and "per minute" pricing set itself apart from Zipcar.

Oh, and this is the conventional auto-sharing market alone. The popularity of peer-to-peer vehicle sharing -- where consumers lend out their own cars for profit -- is a niche that General Motors (NYSE: GM  ) validated last year after allowing all OnStar-equipped vehicles to seamlessly participate in market leader RelayRides' program.

Should Zipcar investors be worried by the sudden crashing of the movement it championed? No. Keep in mind that all of these options haven't stripped Zipcar of its growth-stock status. Revenue climbed 20% in its latest quarter, and margins at its more established markets are expanding. You wouldn't see that if this were a cutthroat market with Zipcar honking its horn for mercy.

Zipcar has openly said that it's monitoring what the competition is doing. If folks don't mind paying more for one-way rentals through car2go or if Hertz can make a profit with more flexible drop-off locations, of course Zipcar is going to embrace what the competition is doing. However, as long as Zipcar's membership rolls and usage continue to grow at a heady clip, it's clear that this growing market has room for plenty of driven competitors.

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.

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

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. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Read/Post Comments (1) | 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 June 21, 2012, at 2:33 PM, dbtuner wrote:

    Avis has 25,000 cars equipped with this technology which is more than every other car share company combined. How is that a "test"? That's like saying D-Day was a "test" of German beach defenses.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1920365, ~/Articles/ArticleHandler.aspx, 10/20/2016 4:23:10 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,162.35 -40.27 -0.22%
S&P 500 2,141.34 -2.95 -0.14%
NASD 5,241.83 -4.58 -0.09%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
ZIP.DL2 $0.00 Down +0.00 +0.00%
Zipcar CAPS Rating: ****
CAR $31.73 Down -0.44 -1.37%
Avis Budget Group CAPS Rating: **
GM $31.75 Down -0.10 -0.31%
General Motors CAPS Rating: ***
HTZ $32.45 Down -0.45 -1.37%
Hertz Global Holdi… CAPS Rating: ***