Looks like we've got our first breaking urban news story of the year with today's announcement of the purchase of car-sharing leader Zipcar by rental car behemoth Avis. Steven Pearlstein laments what the deal means for Zipcar and consumers.
Pearlstein explains why today's announcement that Avis will buy Zipcar for $491 million portends the demise of the car-sharing leader and bad news for consumers.
"The real issue in these deals is culture. Zipcar has a way of doing things that is particularly appealing to the young, hip urbanites who walk, bike and use public transportation most of the time and don’t own a car....Everything about the company — from its marketing to its customer interface to its rules — supports that brand identity."
This culture, however, will be smothered by the merger with Avis, predicts Pearlstein. "The only way for Avis to realize its over-promised cost savings will be to force Zipcar to consolidate the two operations and become more like Avis in everything it does. Eventually, all the old Zipcar executives will be fired or will migrate somewhere else. Auto purchasing will be centralized, as will the pickup points. The Zipcar Web site and computer system will be merged into the Avis Web site and computer system."
While Pearlstein may be right in his prediction of Zipcar's ruin, and in his assertion that the "competition-crushing and innovation-crushing merger" may violate antitrust laws, the bigger question is what this deal means for the future of car-sharing. As other rental companies move into the arena, will consumers follow? Or will this allow other providers like the Bay Area's nonprofit City CarShare to grow their market share, or alternatives such as peer-to-peer car-sharing to catch on?
FULL STORY: How Avis will ruin Zipcar
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