When Betabeat thinks of rental car companies, we think of long lines, oil-stained garages and exorbitantly-priced insurance that we don’t really need. (Do we?) When we think of car-sharing companies, we think of gleaming new Prius’s and smart technology. Which might be one good reason why Avis Budget Group agreed to acquire Zipcar for $500 million in a deal announced earlier this morning.
Avis is paying a 49 percent premium on Zipcar’s stock price, and of course, the company isn’t only buying Zipcar’s reputation. Avis said it expects $50 to $70 million in annual cost savings from the deal as it leverages its fleet across the two companies, and that access to Avis’s vehicles will let Zipcar grow in new markets. (For a sense of scale, Zipcar says it owns more than 10,000 vehicles; Avis claims 10,000 rental locations.) Meanwhile, the rental car giant also expects to benefit from Zipcar’s mobile technology.
Per Avis CEO Ronald L. Nelson:
We see car sharing as highly complementary to traditional car rental, with rapid growth potential and representing a scalable opportunity for us as a combined company. We expect to apply Avis Budget’s experience and efficiencies of fleet management with Zipcar’s proven, customer-friendly technology to accelerate the growth of the Zipcar brand and to provide more options for Zipsters in more places. We also expect to leverage Zipcar’s technology to expand mobility solutions under the Avis and Budget brands.
That all sounds reasonable enough, and Avis isn’t the first rental giant to make a play for car-sharing. Avis’s larger rivals, Enterprise and Hertz, already operate car-share businesses, and Enterprise acquired Mint Cars On-Demand and PhillyCarShare last year.
Still, we can’t help but worry. Please don’t screw up Zipcar, Avis.