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Scott Griffith, chief executive, Zipcar | On the Hot Seat

Zipcar is shifting into higher gear as market widens

(Yoon S. Byun/Globe Staff)
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January 13, 2008

Zipcar, the Cambridge-based company that lets urban dwellers rent cars by the hour, has sped past older car-sharing businesses to become the world's largest. The seven-year-old company recently fast-tracked its growth by striking deals with colleges, corporations, apartment and office complexes, and most recently its US rival, Flexcar. By the time Zipcar and Flexcar finish merging this spring, the combined company will have about 180,000 members with access to 5,000 vehicles in more than 50 markets in the United States, Canada, and the United Kingdom. Zipcar chief executive Scott Griffith, who remains in charge of the merged companies, spoke with Globe reporter Nicole C. Wong.

Q: About two months ago Zipcar announced it will merge with competitor Flexcar. What was the thinking behind your strategy?

A: The merger with Flexcar is really a classic example of the whole being greater than its parts. This is two companies doing essentially the same thing in different geographies. This merger sets us up to be the leader in the category. We truly believe this is a billion-dollar opportunity. That's our biggest goal, to become a billion-dollar company. That's 10 times our current size. It's a good five-plus year goal.

Q: Do you expect to do more mergers in the near future?

A: Not really. There are a few other car-sharing companies. They are mostly in Europe. It's unlikely we're going to do more acquisitions of any scale.

Q: How would you describe the competitive landscape? U-Haul International Inc., Enterprise Rent-A-Car, and Hertz have reportedly been piloting car-sharing programs or are looking into launching them.

A: With our success, we're going to see more entrants into the category. The one thing that really is a benefit from the merger of Flexcar and Zipcar is we're now at a company size of $100 million, which allows us to continue to invest in technology and brand marketing that I think will put us at the top of the competitive landscape for the long range.

Q: Zipcar has expanded to college campuses, to London. What's next?

A: We've been on college campuses for four years but now are aggressively going into college campuses. We're at about 70 college campuses, which is up from a few three years ago.

In the second half of this year, we'll focus on expanding into new cities.

We've been testing in Boston right now - in Back Bay, of course - a further expansion of our fleet with the 5 Series BMW. It has been very, very successful, so we expect to expand our use of that car here in Boston and other cities as well this spring.

Q: What criteria do you use when deciding whether to expand?

A: We look at the cost of parking. The higher the parking costs, the less attractive it is to own a car. We look at public transit availability and use. And the last part is the scale of the city. There's a minimum scale in this business to provide the fleet size we need to be profitable. Pittsburgh, Minneapolis, and Atlanta start to be at the lower end of that scale. Cities that won't work well are Houston, Dallas, or even Denver - driver cities with big interstates as opposed to good transit. Some of the smaller cities we're in, like Vancouver, are not very large but they're vertically very dense. Most of Europe looks attractive. France, Spain, and other parts of northern Europe look very attractive to us.

Scott Griffith, chief executive, Zipcar

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