Having garnered a positive response for its Zipvan cargo van service in San Francisco, Boston and Washington D.C., Zipcar (NYSE:ZIP) has now expanded the service to Chicago, starting with 15 vans available in 9 locations. Zipcar first experimented with the service with a pilot program in San Francisco last November and subsequently expanded to Boston and Washington D.C. in March. Apart from competing with car rentals like Hertz, Avis and Enterprise through its car-sharing business, Zipcar is now challenging truck rental services like U-Haul with its van rental service that uses Ford (NYSE:F) E-150 cargo trucks. It is likely to launch the service in more U.S. and Canadian markets during the year. Zipcar has over 700K members who use approximately 9K of its vehicles.
With hourly rates starting from $15.75/hour and $109/day, the self-serve Zipvan service offers full size Ford E-150 cargo vans to enable customers to transport bulky personal items like furniture purchases, allow students to relocate in and out of dorms, and help businesses meet their transportation needs too bulky for cars or pickup trucks. The charges include the costs of gas, insurance, parking, roadside assistance and up to 180 miles of driving per day.
The Zipvan service is modeled on similar successful van service in Zipcar’s U.K. operations, previously known as Streetvan (part of Streetcar, a company acquired by Zipcar in 2010) that has seen strong adoption and utilization.
Zipcars enjoys immense popularity among urban and young drivers, who prefer its technology-driven services, including those who do not satisfy age requirements for traditional car rentals like young college students. The diversification of Zipcar service to provide Zipvans would also attract users in the age group 21-23 years who have to pay a $18 surcharge with other van rental services.
We have a price estimate of $18 for Zipcar, about 80% ahead of the market price.