Skift Take

Sometimes acquired companies transition to the parent company and lose their whole mojo. That doesn't appear to be happening with Avis Budget and Zipcar, which is getting newer vehicles at lower cost, and is positioned to move into new geographies at a quicker pace.

In a move that will make the service more useful to its members, Zipcar “in the near future” will introduce one-way rentals in select cities, Avis Budget CEO Ronald Nelson said today.

This would be a substantial change for the car-sharing service as it currently prohibits one-way rentals.

Zipcar members can’t currently do one-way drives and instead have to return the vehicles to their reserved locations where the rental began.

That’s just one of the changes under way at Zipcar, which Avis Budget Group acquired in March. Since that time, Avis Budget has made multiple moves to position Zipcar for growth.

In tandem with its third quarter earnings announcement today, parent company Avis Budget indicated that it added more than 1,000 vehicles to Zipcar’s fleet during the summer to meet demand, and it replaced 20% of Zipcar’s vehicles with new cars and at a lower cost.

Improving Zipcar’s cost structure will enable it to expand faster into new geographies, Avis Budget says. Zipcar now has a presence at 22 airports — it had none prior to the merger — and five cities have been added since March.

Replenishing Zipcar’s fleet, coupled with fleet-sharing with Avis Budget during high-demand periods, means enhanced availabilities for Zipcar members, which should reduce membership “churn,” Nelson said.

During the third quarter, Zipcar boosted its membership ranks 11% year over year to 825,000. Adding Zipcar to the Avis Budget family should account for a $25 million EBITDA increase to Avis Budget, officials said.

If things seem to be going well for Zipcar, it doesn’t means that the merger has been carried out without issues.

Avis Budget stated that it will indeed achieve $50 million to $70 million in synergies with Zipcar, but this will be achieved at the end of 2015 rather than in the beginning of 2015.

Still, the merger is looking pretty good for both Avis Budget and Zipcar.


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Tags: avis budget, zipcar

Photo credit: Zipcar will soon launch one-way rentals for its Scion xB vehicles and others. Zipcar

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