Zipcar is an American car-sharing company that is owned by Avis Budget Group that purchased Zipcar for an estimated $500 million on 14th March 2013. This car-sharing company was co-founded by Antje Danielson and Robin Chase in 2000 with the first Zipcar operating in June 2000 around Boston, Massachusetts. Since then the company has expanded and now provides automobile services to members around the urban areas and college campuses throughout the states of the United States, Canada, Costa Rica, Taiwan, Iceland, Turkey, and the United Kingdom. The company has fared well since its establishment and is one of the top car-sharing services in the U.S. with an estimated annual revenue of $278.9 million. In this article, we will see the Zipcar SWOT analysis and their competitors
Zipcar SWOT Analysis
Strengths
The greatest strength of Zipcar is its distribution and availability of its automobiles in different regions that make it easily accessible. This easy accessibility allows Zipcar members to avail themselves of those vehicles that are closer to their home or work area saving time. This disruptive business model makes the company very user-friendly, boosting customer satisfaction that retains old members and attracts more potential members. The company also tends to customer satisfaction as they give flexibility to the members to use the company’s car if required. This customer satisfaction has allowed Zipcar to retain its loyal members even after the hike in its annual membership prices.
Weaknesses
Although the loyal members of Zipcar see no problem with the hike in Zipcar’s membership prices, other members may not perceive this increase as justifiable when compared to other companies providing the same services. Zipcar also faces problems when entering into new markets as it must incur investments into vehicles that may or may not secure profitable payoffs. Besides the uncertainty of profit, Zipcar’s poor management practices can also hinder its expansion and successful establishment of branches in new sectors.
Opportunities
The rising population has presented itself as a great opportunity for Zipcar and other such car-sharing companies as this exponential growth gives these companies the potential to expand their services globally into growing markets such as China and India. The rise in fuel cost can also benefit Zipcar as this price hike can urge people to shift from purchasing personal vehicles to car-sharing modes which are relatively much cheaper. Many new segments have emerged in recent times which provides opportunities to expand into new segments and niches.
Threats
The main threat that Zipcar faces is competition from other well-established companies such as Hertz and Avis that have already made a strong presence in the car rental industry. However, this is not the only threat that Zipcar faces, the rise in petrol prices can help to attract new members but on the downside, it can also decrease the profitability as an increase in petrol prices will decrease the profit margin. The rapid increase in prices can be a result of deteriorating economic conditions. These conditions can affect the business as it directly or indirectly influences an individual’s purchasing power and spending patterns and habits.
Strengths of Zipcar
The main strength of Zipcar is undoubtedly its policies that tend to the customer satisfaction of its members. This customer satisfaction is also a direct result of its disruptive business model due to which the Zipcar automobiles are accessible and available from different regions of the state. This allows the members to save time as they can render services from the Zipcar nearest to their home or work area. The company provides flexibility to its members to use the company cars whenever required and to directly avail company services after becoming a member without the hassle of interacting with the Zipcar front office. These policies and geographical distribution of Zipcar helps to retain loyal members and attract new members despite the rise in the annual membership prices.
Weaknesses of Zipcar
The main weakness of Zipcar is its increasing annual member fees and hourly and daily rates as many people do not see this hike in prices as justifiable when compared with other companies that provide car-sharing companies. Although this has not affected the loyal members, it hinders attracting new members and retention of members to avail Zipcar services. Since Zipcar does not offer any such employee retention plans such as training and other fringe benefits, it leads to a lack of organizational commitment and high employee turnover that can subsequently reduce organizational productivity and increase recruitment costs decreasing the profit margin.
Zipcar being a car-sharing company must first invest in vehicles, if they decide to enter into new potential markets such as Barcelona and London. This heavy expenditure, however, does not guarantee profitability and may also lead to huge business losses if they do not take efficient business decisions.
Opportunities and Threats
The exponential population growth has subsequently led to the creation of new market segments that can be taken advantage of to grow the business and increase its market share. The hike in fuel prices can also prove to be advantageous in expanding the business as these hikes can compel people to switch to car-sharing methods instead of purchasing private vehicles. This again can help to increase Zipcar’s market share if the company takes full advantage of this opportunity. The developing countries such as India and China provide new market segments and niches which is an opportunity for car-sharing companies such as Zipcar to expand business and product-line.
Besides the threat of its competitors such as Hertz and Avis that are well-established car-sharing companies, Zipcar also faces threats of reduced profitability due to an increase in fuel prices. Although a hike in fuel prices provides opportunities for Zipcar to increase its market share, it can also lead to a decrease in the profit margin because of the very same reason. Economic instability and decoration can also lead to a decrease in the profit margin as it will directly affect members’ purchasing power and spending patterns that will subsequently affect the business. This decrease in profitability due to the rise in fuel prices and economic decoration because of the Covid-19 pandemic is one of the major threats currently faced by Zipcar.
Competitors of Zipcar
The main competitors of Zipcar in the U.S. and other countries are the American car-sharing company Hertz and the American car rental company Avis. The main strength of Hertz is its strong and diverse portfolio of well-recognized brands that add to its advantage as a well-established brand compared to Zipcar. Similarly, Hertz is also globally recognized as a company that tends to customer satisfaction. On the other hand, the main strength of Avis is its huge market share in different car rental industries making it one of the most popular car rental industries in the United States with strong financial performances.
Conclusion
Through the SWOT Analysis of Zipcar, we can conclude that it is one of the fastest-growing car-sharing industries in the U.S. since its establishment in 2000. The company has been able to establish itself as a company that tends to its member’s satisfaction making it one of the top car-sharing companies in the United States, United Kingdom, and Canada to name a few. Therefore, to sum it up, Zipcar has the potential to surpass its competitors and expand its subsidiary in different emerging markets if the company focuses on its strengths and the opportunities of the current trend and works on its weaknesses and threats holding the company back.
Frequently Asked Questions
- Who owns Zipcar?
Zipcar was co-founded by Antje Danielson and Robin Chase in 2000. It was one of the first car-sharing services to operate in the United States with its first Zipcar automobile operating around Boston, Massachusetts. On the 14th of March, 2013, the Avis Budget Group purchased Zipcar for an estimated $500 billion under the presidency of the then CEO, Scott Griffith. Kaye Ceille was appointed as the new President of Zipcar after the previous President and the CEO of Zipcar stepped down. Zipcar even after being acquired by Avis Budget Group is still headquartered in Boston, Massachusetts.
- In which countries does Zipcar operate?
Zipcar is an international car-sharing company that is a subsidiary of the Avis Budget Group that operates in and around the urban areas and college campuses throughout the states of the United States, Canada, Costa Rica, Taiwan, Iceland, Turkey, and the United Kingdom.
- How can one book a vehicle from Zipcar?
The members can reserve Zipcar vehicles via the Zipcar app, through Zipcar’s online portal, or via a phone call at any time or in advance, for up to a year. The members who have booked the Zipcar can locate their vehicle via the Zipcar app available on both Android and Apple stores. The app can also be used to unlock the Zipcar doors and can also be opened with the help of the access card that is given to the Zipcar members. Although Zipcar vehicle rate differs from city to city, major cities start at about $9 per hour for smaller cars and $10 per hour for larger cars and SUVs. The vehicles can also be rented on a daily basis for $74 per day for smaller vehicles and $87 per day for larger vehicles. The customers also have to incur an application fee of $25 and a monthly fee of $7. But the fuel, parking, insurance, and maintenance fees are all included in the price.
