Zipcar Eyes Young People in U.S. Expansion

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Trefis) -- Zipcar's ( ZIP) U.S. expansion in 2011 focused mainly on universities and college campuses.

The company says that 18- to-34 year olds represent its most important market and hold the key to Zipcar's popularity and the overall expansion of the car-sharing market. From tying up with Ford to launching the Facebook app and investing in the college P2P car-sharing Wheelz, Zipcar is pulling out all the stops to become the favorite among young drivers.

Zipcar is a membership-based car sharing company that serves over 673,000 members with a fleet of over 9,000 vehicles in North America and Europe. The membership grew by 25% in 2011, leading to 30% higher revenues compared to the previous year and its first two profitable quarters over the second half of 2011.

In addition to cmpeting with traditional rental companies and car-sharing services like Connect by Hertz, Enterprise's WeCar, UHaul's UCarShare and City Car Share, it also faces competition from new low-cost, peer-to-peer (P2P) car sharing services like RelayRides and GetAround.

See our full analysis of Zipcar here.

The "millennials" are Zipcar's most popular patrons. The company recently conducted a study that revealed the segment of 18- to 34-year- olds (who form a quarter of the U.S. population) are the most important market for the car-sharing company and already constitute more than half of Zipcar's membership base.

The study, which examined the young generation's attitudes toward personal transportation and car ownership, found them to be increasingly adoptive of collaborative consumption. The younger generation today increasingly values access to cars over personal ownership. Millennials are strong adopters of car-sharing, making them the most lucrative and influential market segment for Zipcar.

Last year Zipcar expanded its University Program, adding services in 40 new college campuses, reaching a total 250 institutions nationwide. In late August, Zipcar also tied up with Ford in a two-year partnership , making it the largest automotive source for its University Program.

College and university campuses serve as significant markets for Zipcar as students are more likely to look for alternatives to personal car ownership than any other demographic group. Renting cars to students also constitute a long-term marketing strategy to build the network out. Students using Zipcars while in college are more likely to subscribe to Zipcar car-sharing against car ownership when they enter jobs.

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