Zipcar (NYSE:ZIP), the world’s leading car sharing network, has completed the purchase of a majority ownership interest in Barcelona-based car sharing company, Avancar, after integrating Streetcar car club in London last year. Having appointed a new President for Zipcar Europe last month, the company is expected to significantly expand operations across Europe over the next two years. It will announce its annual results this month and although it may continue to post losses in 2011, we expect the company to report strong top-line growth and improved margins. Zipcar competes with traditional car-rental companies like Hertz Global Holdings (NYSE:HTZ), Avis Budget Group (NYSE:CAR) and car sharing services like Connect by Hertz, Enterprise’s WeCar, UHaul’s UCarShare and City Car Share.
See our complete analysis for Zipcar
Barcelona, A Top 20 Global Car Sharing City
Zipcar now holds a controlling stake of 60% in Avancar, building on its initial equity investment in December 2009. Zipcar estimates Barcelona to be among the world’s top 20 car sharing markets. With strong presence in London and Barcelona and new President, the company is warming up to gradually build a pan-European car sharing network across the continent, whose market could touch 3 billion euros with 5.5 million members over this decade. We could see 2-3 Zipcar market launches in the next two years that could come through organic growth, acquisitions, joint ventures, franchise opportunities or other relationships.
The average membership of Zipcar Europe increased from 4,000 in 2008 to close to 70,000 in 2010 with the Streetcar acquisition. We expect the company’s European membership to rise and exceed half-a-million over the next decade.
We have a price estimate of $25.64 for Zipcar.
