Zipcar Inc. should watch its back with the entry of Enterprise Holdings Inc. into hourly car rentals this year. Zipcar had formed this growing niche, which has already been penetrated by No. 2 Hertz Global Holdings Inc. The closely held Enterprise is the largest car-rental company in the U.S. Last month, it completed the acquisition of Mint Cars On-Demand, an hourly car-rental firm located in New York and Boston. Enterprise plans to bring Mint Cars together with two smaller brands it already owns to form Enterprise Car Share. For this month, Enterprise seeks to expand its New York fleet by around 50%.
Zipcar built the business of hourly car rental in Cambridge, Mass., in 2000. It continues to dominate in this segment, with a U.S. membership of around 500,000 and about 9,000 vehicles. On the other hand, Hertz is planning that for this year, it will be able to equip its entire 375,000-vehicle U.S. fleet for hourly rental. Ryan Johnson, the head of Enterprise’s hourly car rental business, said that no one could compete with Zipcar’s network at the moment.
However, he believes that Enterprise will benefit from the strength of its network so that it could soon be at par with Zipcar. According to estimates by researcher IBIS World, the market for hourly car rentals will comprise 6% of the $30.5 billion U.S. rental-car market – resulting to about $1.8 billion. Meanwhile, market researcher Frost & Sullivan predicts that Hourlies may get to $3.3 billion in North America by 2016 and $10 billion worldwide. Zipcar’s shares have fallen by 24% this year because of the impending rise of new rivals. Zipcar has over 2,500 locations in 15 major U.S. cities and at over 250 universities. Some of these locations have only one car. [source: Autonews]