Zipcars to Zipvans: Launches Pilot Cargo Van Service in San Francisco

December 1st, 2011 by Trefis Team
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After giving stiff competition to car rentals like Hertz, Avis and Enterprise, the world’s leading car sharing network Zipcar (NYSE:ZIP) is now testing waters to challenge truck rental services like U-Haul by announcing a pilot van rental service called Zipvans in San Francisco using hearty Ford (NYSE:F) trucks, in addition to its regular car sharing service. Zipcar has over 650,000 members who use approximately 9,500 of its vehicles.

See our complete analysis for Zipcar’s stock.

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The self-service model in SF offers full size Ford E-150 cargo vans to allow consumers to transport bulky personal items, students to relocate in and out of dorms and business transportation needs too bulky for cars or pickup trucks. Zipvans would be available for reservation for hourly or daily use with rates starting from $14.75/hour and $99/day, which would include gas, insurance, parking, roadside assistance and up to 180 miles of driving per day.

This pilot program is modeled on similar successful van service in Zipcar’s UK operations, previously known as Streetvan (part of Streetcar, a company Zipcar acquired in 2010) that has seen strong adoption and utilization over the last three years. Zipcar conducted a member survey for its Zipvan offering and received favorable response from 40% members expressing interest in Zipvans if available. Based on the performance in SF market, Zipcar may consider launching the service in select U.S. and Canadian markets next year.

Zipcars enjoys immense popularity among urban and young drivers, including those who do not satisfy age requirements for traditional car rentals like young college students. It has been nurturing a loyal customer base who prefer its technology driven services with efficient in-car equipment, automated access through Zipcards, and convenience solutions like iPhone and android apps to manage reservations. The diversification of Zipcar service to provide Zipvans would also attract 21-23 year old users who have to pay $18 surcharge with other van rental services.

We have a price target of $25.64 for Zipcar, about 60% ahead of the market price.