Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Kevin McLaughlin, in driver's seat, in one of the AutoShare vehicles.
Kevin McLaughlin, in driver's seat, in one of the AutoShare vehicles.

Your Business magazine

The AutoShare saga: A long, strange trip Add to ...

Once Zipcar entered Toronto, it scaled up quickly: It had 100 cars within a month, and close to 300 after two years, besting AutoShare’s fleet. “Toronto seems to be off the charts relative to anything we’ve seen before,” Griffith said of the growth six months after the launch. Zipcar’s Toronto general manager, Michael Lende, recalls that, initially, when he’d walk into a room to talk about his operation, “people didn’t know what car sharing was. Some 18 months after we came, I’d walk in and they’d report the definition to me.”

Having his company treated as irrelevant and his market as practically virgin terrain was merely irritating to McLaughlin compared to the pain of the Great Parking Land Rush that followed. Offering numerous convenient locations — be they private and municipal lots or just a few spaces rented from a restaurant, a gas station or the like — is a key competitive advantage in this business. When, shortly after Zipcar’s arrival, McLaughlin told a reporter that AutoShare was paying $75 a month per spot to park its cars at a Loblaws on the east side of downtown, Zipcar offered more.

The same pattern repeated elsewhere. As a result, AutoShare’s average parking cost jumped from $80 a spot to $200. “Now, there’s a new category at every parking company called ‘car-sharing,’ that Zipcar created, that’s fixed and extremely expensive,” says McLaughlin. (By way of response to the parking imbroglio, Zipcar PR head John Williams says, “Our goal is to make our cars broadly available to as many members and potential members as possible, and parking spots are obviously important.”)

McLaughlin admits that Zipcar’s intensive marketing grew the market for both companies. But as AutoShare tried to keep up — lowering prices, adding cars and tripling its annual marketing budget — it dropped into the red.

And the bad blood has continued, at least on McLaughlin’s side. The two firms recently teamed up to lobby the city for permission to park their cars on the streets. “The minute something gets signed, they come out with a press release saying, ‘Zipcar has got Toronto’s first on-street parking spot,’ ” fumes McLaughlin. “So, okay, now I have to put out a press release saying AutoShare did that too? It would have had better impact to do it together.” Lende’s take on the rivalry: “We have a very healthy competitive situation, and consumers benefit by having more choice.”

But if Zipcar is aggressive, it’s also smart. The company has long focused on university students, offering cars to people as young as 21 (most rental-car agencies don’t rent to drivers under 25). Not only do students tend to lack vehicles but, after graduation, they gravitate to coastal cities where the company also has outlets. Zipcar now has pods at more than 150 campuses in North America. Most of these are exclusive deals, with the institutions guaranteeing the company a minimum monthly revenue.

As well, the Zipcar fleet tends to be trendier than that of its rivals, including models such as Volkswagen Beetles and Golfs. It’s also newer: Most of its vehicles are less than three years old, while other car-shares generally spread their car investments over six years.

To streamline the rental process, Zipcar has plowed money into technology, offering keyless car entry (instead of keys in lockboxes), a sophisticated online booking system and mobile phone reservations. Its investment in choice parking has paid off with greater customer convenience. “I can usually get a car within a 10-minute walk, max, of my home or office,” says Lesley Grant, a Toronto television executive who signed up with Zipcar after checking out both companies. “The cars are kept in excellent condition and there are a number of models available.”

Four years after its arrival, Zipcar dominates the Toronto market, with about 350 cars — 64-per-cent more than AutoShare. Today, Zipcar has more than 400,000 worldwide members in more than 50 cities — Vancouver being the only Canadian operation besides Toronto — and $130 million (U.S.) in revenues (2009).

Report Typo/Error
Single page

Follow us on Twitter: @GlobeSmallBiz


Next story




Most popular videos »

More from The Globe and Mail

Most popular