Zipcar Nearly Breaks Even in Q2, Bets On a Startup to Beat the Rental Giants
On today's earnings call, Zipcar reported a second-quarter loss of $422,000, or $0.01 a share, nearly putting the car sharing company in the black for the first time since going public last year. Analysts, who predicted Zipcar would break-even, were not surprised by the numbers, but as CEO Scott Griffith explained his strategy for profitability, they may have been surprised to hear him mention a San Francisco peer-to-peer car sharing platform called Wheelz.
As our own Sophia Horowitz described it, if peer-to-peer car sharing is "the Airbnb for cars," then Zipcar is more akin to the hotel business. So, why in February did Zipcar lead a $13.7 million Series A investment in Wheelz, seemingly a competitor? It wants Wheelz's hardware and mobile technology. Now more than ever, with rental car giants such as Hertz and Enterprise finding success in the car sharing market, Zipcar is betting Wheelz will keep it ahead of customer demand, especially in suburban and rural areas where it has yet to expand or during peak-demand in existing markets.
"Ninety percent of Zipcar members use smartphones and the majority of reservations are done over the phone," said Griffith on the earnings call.
Like its competitors, Wheelz connects car owners and renters based on proximity via a mobile app that uses GPS technology. Where Wheelz differentiates, and what it says led to Zipcar's interest, is its in-car hardware system called Drivebox. Combining GPS and remote connectivity, Drivebox responds to commands from the mobile app, validating the reservation and remotely unlocking the car. Wheelz initially launched at Stanford University, and has remained focused on growing the consumer side of its business in college communities.
"We're a technology company solving a transportation problem," says Wheelz CEO Jeff Miller, who met his co-founders while working at Better Place. "To make peer-to-peer a liquid marketplace, you need to be in every make and model vehicle with a robust app and hardware."
Peer-to-peer car sharing is a sexy, crowded category. Wheelz competitor Getaround today announced a $13.9 million Series A with investment from Yahoo’s Marissa Mayer, Ashton Kutcher, Menlo Venture’s Shervin Pishevar and Google’s Eric Schmidt. Getaround's new service Getaway aims to compete with Zipcar by allowing its members to rent out their cars full-time. In a move toward its own Drivebox, RelayRides partnered with GM and OnStar to give its app the ability to unlock and rent any car with an active OnStar account.
Zipcar remains the world's leading car sharing network by membership, but with Hertz and Enterprise biting at its heels, it's only a matter of time before the rental giants pull another a copycat move and go after peer-to-peer car sharing startups.