Hourly rental cars ease city driving woes

The face of urban transportation is changing, with several companies offering revolutionary new options for car rental that are both economical and environmentally friendly.

Robin Chase, CEO of Zipcar Inc., a company that rents automobiles by the hour in major cities across the country, spoke at the GW School of Business and Public Management’s Hoffman Lecture Series Thursday about her company and her experiences as a transportation entrepreneur.

Last year, Chase founded Zipcar. A graduate of the Massachusetts Institute of Technology Sloan School of Management, Chase said she developed the idea from necessity when she and her husband competed more and more for use of the family’s one car. Seeing a need for an affordable short-term car rental service, she created a business model based on similar successful services in Europe, where car sharing has existed for years.

Zipcar, which first hit the streets in Boston, now has nearly 5,000 members. The service has expanded to the D.C. metropolitan area, New York/New Jersey and Denver. Cars are positioned in 150 locations throughout the areas served, providing members the use of a car free of insurance costs, maintenance and cleaning. The Zipcar location closest to GW is at Wisconsin Avenue and M Street in Georgetown.

“We provide on-demand self-service to cars available to members by the hour,” Chase said. “Fifty percent of our users sold or decided against buying a new car.”

Members, who must be at least 21 years old, must submit to an instant online driving record check and cannot have had a major traffic violation in the past three years or an alcohol violation in the past seven years. There is a $20 annual membership fee. Cars are charged at $6 to $8 per hour, depending on the location of the car, plus 40 cents per mile. Maintenance, gas and insurance costs are all included in the hourly rate.

Members receive their own Zipcards, “proximity cards” used to open the Zipcar door. When a user reserves a car online, the member’s information is sent to the automobile and programs the car door to open when the Zipcard is used. Zipcar technology tracks the time the member uses the vehicle, as well as the miles traveled, and members are billed once a month by credit card.

The business is also environmentally conscious; according to Zipcar research, one shared car takes 7 to 10 privately owned cars off the street.

“It is possible to start an environmentally friendly business,” Chase said. “(Zipcar) is great for the customers, it’s great for the cities, it’s great for the environment.”

Chase said the average age of a Zipcar member is 35. but the service is gaining popularity with students.

“I don’t need a car 90 percent of the time, but for all those other times, this is a great idea,” said law student Sarah Braman.

Zipcar’s ad campaign targets young people who may need to make a few car trips each month but fall short of justifying the expense of a new car purchase.

One of Zipcar’s ads running in D.C. reads, “350 hours a year having sex, 420 hours a year looking for parking – what’s wrong with this picture?”

The slick advertising appears to be effective, Chase said, as the Boston area receives 300-350 new membership applications each month.

Although the concept is relatively new in D.C., Zipcar has always had competition in the car sharing business.

Flexcar, founded in Seattle in 1999, is the oldest and largest car-sharing company in the country, with 6,000 members nationwide.

Members pay a one-time membership fee of $25, then from $3.50 to $7 per hour. There is an additional charge of 90 cents per mile traveled.

The two services are almost identical in practice; however, there are two distinctions. Flexcar drivers must keep a log of the time and mileage accumulated. Zipcar tracks that information automatically. Secondly, Flexcar offers a larger variety of vehicles, including pickup trucks, while Zipcars are generally compact vehicles such as the Volkswagen Beetle.

Stoic in the face of competition, when asked about the threat of car rental giants such as Hertz or Avis entering the car-sharing market, Chase said, “I’m not afraid of them.”

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