Join Date: Nov 2004
Hertz Will Try to Connect With the Carless
If imitation is the sincerest form of flattery, then Zipcar, the popular car-sharing company for carless urbanites,* should certainly be flattered.
Today, the Hertz Corporation, which calls itself “the world’s largest general use car rental brand,” is starting a service called Connect by Hertz that is strikingly similar to Zipcar’s. Available initially in New York and Hertz’s hometown of Park Ridge, N.J., as well as London and Paris, it will serve customers who pay an annual fee to rent cars by the hour — without some of the hidden and not-so-hidden fees lumped into typical rental contracts.
The arrangement is familiar to members of Zipcar, which started eight years ago.
Like Zipcar, Connect by Hertz members can make reservations online and use swipe cards to open their cars, which will be parked at 10 lots in Midtown Manhattan. In a nod to Zipcar’s success in signing up young drivers, the Toyota Prius and the Mini Cooper will be among the first 35 cars that Connect by Hertz will offer in New York.
Hertz has 40,000 cars in the New York area, so its new car-sharing service is clearly in its early stages. By comparison, Zipcar has about 5,500 cars in 13 big cities, including 1,400 cars in 300 locations in the New York metropolitan area.
In an interview, Mike Senackerib, senior vice president for marketing at Hertz, did not acknowledge Zipcar by name, despite the obvious parallels. What he said, instead, was that “there’s a market for car-sharing and it’s larger than has been developed to date.”
He disagreed with suggestions that Hertz’s hourly rental business could erode its existing business, which forces customers to pay for a full day even when they use their cars for just part of the day.
“This is a different opportunity because we don’t reach the customers who only want a car for a few hours as well as we could,” Mr. Senackerib said.
Starting in New York was no accident, he added, because of the city’s concentration of people who do not own cars but need them occasionally. Next year, Hertz will expand the number of cars and locations, and open in 20 additional American cities and 20 more abroad, he said.
Connect by Hertz will have unique features, including a button that drivers can hit to call a customer service operator, not unlike the Onstar service. Cars will also have Bluetooth, E-ZPass, iPod docking stations and a GPS system called Hertz NeverLost.
Connect by Hertz customers will also be able to call to reserve cars (for a $3.50 fee). Its Web site is splashed with green, not Hertz’s trademark yellow.
Rental car companies have been hurt by the downturn in travel and the woes affecting the auto industry, so it is natural that they would take aim at Zipcar, which has attracted 260,000 members since it began in 2000.
Earlier this year, Enterprise Rent-a-Car, for example, created a car-sharing business called WeCar for companies, government agencies and colleges that wanted cars for their workers and students. WeCar, which has about 100 cars around the country, has vehicles on the Google campus in California. All of WeCar’s vehicles are hybrids.
Robin Chase, the former chief executive at Zipcar, said it’s a no-brainer for Hertz and Enterprise to get into the car-sharing market, which was first developed in Europe. She also sees nothing wrong with Hertz relying heavily on Zipcar’s formula.
“Zipcar has vetted the space,” said Ms. Chase, who now runs GoLoco, a ride-sharing service. “If I were them, I would go straight to Zipcar and copy everything.”
She said the key is whether Hertz can use technology to keep costs down, and whether the company can mimic Zipcar’s success marketing to the under-35 urban set who rely heavily on public transportation.
“The question is how clever their managers are,” she said. “I’m sure they are going after the same people Zipcar is using, but they will market with their own spin.”
This raises the question why Hertz included its name in its car-sharing service. Hertz, after all, is a corporate titan, a potential turn-off to college students and young professionals.
For its part, Zipcar is not worried about losing its edge in a market it helped popularize.
“We’re certainly sitting up and noticing what other competitors are doing,” said Zipcar’s chief executive, Scott Griffith. But “this is Hertz car sharing 1.0 and we’re at Zipcar 8.0.”