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.
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