October 31, 2007
The Little Cult of Car Users
Posted by Lisa Fairfax

According to the Washington Post, one car industry expert maintained that while the car sharing industry, in which both Flexcar and Zipcar are engaged, may not supplant the more traditional car rental market, it has developed a "little cult of users."  Both Flexcar and Zipcar, the nation’s two largest car-sharing firms, rent cars by the hour to people who are able to satisfy their environmental consciousness, while avoiding the expense of car ownership.  I must admit I never really thought this idea would take off.  It could be because I grew up in LA and cannot image getting around without owning a car.  Or maybe it is because the car sharing industry relies significantly on students, and hence I wonder about the wear and tear on the cars being shared.  Yet now that I think about it further, it seems that the car sharing industry is just a further extension of the leasing business model, whereby people are able to use cars without the expense and hassles of car ownership.  Indeed, the car sharing companies take care of gas and insurance.  And because relying on car sharing means you do not have to worry about where to park your car, it certainly makes sense for people who live in cities like DC where parking is scarce.  Of course neither of the two car sharing companies has managed to achieve profitability.  However, the two companies hope profitability is just around the corner, and hence plan to merge in order to establish one identifiable brand that offers a larger fleet of cars to share.  Experts predict that a larger fleet of cars will allow the company to achieve economies of scale and hence make more money.  I can imagine that offering a larger fleet of cars also provides certainty for customers regarding the availability of cars, thereby ensuring their commitment to the car sharing arrangement.  Since I am not personally aware of anyone I know actually participating in car sharing, it could be that this trend has simply passed by me.  Yet I can imagine that if the new company is successful in getting students to believe that car sharing is a viable and environmentally friendly alternative to car ownership, then there could be a core set of people committed to this industry and its business model.

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