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One of the few startups I pay good money to every month is Zipcar. The car sharing service really is quite amazing. If you haven’t heard of car sharing, here’s a very simple overview. In a variety of cities around the world, people share cars. The cars are typically located around a city center and can be rented by the hour or day. With Zipcar, gas, maintenance and insurance are included in the rate. And for me, the cars are so close that it’s almost like I have my own car except that I can only use the car when it’s free. And with Zipcar, your key can be used in any city that Zipcar operates.
This morning I received an email from Zipcar that they have aquired UK-based car sharing service Streetcar. From their acquisition announcement, “When the transition is complete, you will have access to more than 1,000 cars in the city of London and the surrounding areas. So, when your plans take you across the pond, whether for business or pleasure, grabbing a Zipcar will be even easier than it is today.” Honestly, I can’t wait to travel to London (once the ash is gone) because I’ve always wanted to drive on the wrong side of the road!
The WSJ says the deal is worth about $50 million and Streetcar had 2009 revenues of $25 million.
Earlier this month we reported on Canadian car sharing service CityFlitz as their website was removed and some customers were upset that they received no response to their customer service emails regarding their security deposits. The CityFlitz service concept offered car rentals for $1/hour (CAD) and the cars were wrapped with advertising.
Today I noticed that the CityFlitz website is back with the following unfortunate message:
Please be advised that due to a number of unfortunate circumstances, including but not limited to the general financial crisis in the economy, CityFlitz Advertising Inc. is no longer solvent and is unable to continue as a viable business.
The company is considering its options, including a potential voluntary assignment filing into formal bankruptcy protection. You will be advised in due course by the bankruptcy trustee, once that decision has been made.
Please be advised that any claims which may be received by the company will not be defended or responded to.
CityFlitz Advertising Inc.
A Facebook group was setup for customers to discuss the situation. Some CityFlitz customers noted that after a call to the Better Business Bureau the company appears to have filed for bankruptcy.
We first covered Canadian-startup CityFlitz last September. We learned about the car sharing service via the FreshBooks blog. CityFlitz is a car-sharing service offered in Canada. The concept of car sharing, popularized by ZipCar, is based around many people sharing a bank of cars. I use ZipCar about once a week and think it’s a great service as they take care of everything and I just pay for the hours I use the car.
CityFlitz tried a more involved business model than ZipCar employs. CityFlitz wrapped each of their cars with advertising and then only charged members $1/day to use the car (gas not included). ZipCar has a maximum mileage per rental period while CityFlitz wants you to drive as much as possible so that the advertisements are seen around town. If you drive less than 30km per day with CityFlitz, you are charged a penalty. CityFlitz cars also come with WiFi inside the car which is pretty neat.
We received a couple of emails today about CityFlitz and that their domain name is no longer functional. When we load CityFlitz.com, we are redirected to what appears to be a web hosting provider. I’ve tried to email the company but so far no response. If I receive a response, I will update this post. In my initial review I wondered if the company would be able to sign enough advertisers to support the cars as a going concern.
In July, Esteban reported that CityFlitz was expanding to Montreal. He also noted that advertisers were paying $7,000 a month on average for advertising on the fleet of cars.
One member left a comment on our initial post noting that CityFlitz charged a security deposit of $350 (unsure if it’s CAD or USD) and the member has been unable to receive a refund. There are two additional comments on the CityFlitz Facebook page also regarding the security deposit. You can read the full terms using the Google Cache. Let’s hope this is just a temporary issue.
I like the concept that CityFlitz used and maybe the way to make it work is to charge a minimum fee for the car rentals that equals the bottom-line cost and use the advertising as the profit. I might be willing to drive around in a advertising wrapped ZipCar if I received enough of a discount to make it worthwhile.
I’ve been using the Zipcar service for about 18 months. Zipcar is a shared car rental service where you can rent cars for an hour or more at locations that are typically nearby where you live or work. If you are new to the service, check out my video review from last year.
I’ve used the service in Philly and in San Francisco and generally find that those Zipcar cars are much cleaner and better looked after than the ones in NYC.
Several months ago we received an alert email from Zipcar that prices would be increasing because of the rise in fuel prices. Zipcar mentioned that the a good percentage of their costs come from fuel charges and that they needed to pass these charges along to us, the Zipcar customer. Fine, we are supposed to support this shared car, green, environmentally friendly service, right? At that point gas was over $4.50/gallon here in NYC.
Today I see that the average gas price in my neighborhood is approximately $2.30/gallon and it continues to drop. So Zipcar, when do you plan on dropping the price of the hourly rentals back? You see, you told us that it was gas price increases that forced you to increase the price. Therefore now that the price has dropped, you need to remove the increase. That’s how it works.
Of course we know that airlines and deliver couriers also need to drop the surcharges they added when fuel prices increased. I hear that they can’t drop the surcharges because of their contract and option pricing. Eventually their contracts will run out – will the surcharges go away? Of course not.
I certainly hope that Zipcar will return the car rental rates to the price before the gas price increases earlier this year. If prices go up again, let’s talk Zipcar. Until then, do the right thing.
Not removing surcharges when they aren’t needed is going to hurt this economy bad – because the next time (fuel) prices go up, companies will push the surcharges even higher.
If you have been reading CN for a while, you know that I use a ZipCar pretty regularly. I think the service rocks as I am able to grab a car when I need it and the price includes gas and insurance. While not exactly the same as having my own car, it works here in NYC. The cars range in price from $9-$16/hour.
Tonight I found (via the FreshBooks blog) a new car rental service that hopes to change the game for companies like ZipCar. CityFlitz rents cars for CAD$1/day and yes, I did say one dollar a day. CityFlitz wraps the cars with advertisements and the company calls the cars, "trendy mobile billboards". An example of a car is displayed below.
This is a very interesting model in my opinion for a number of reasons. First, unlike ZipCar which restricts your total miles per rental period, CityFlitz wants you to drive as much as you want. In fact, if you drive less than 30km per day, you are charged a penalty. Naturally the goal is to get the advertiser’s message out to the public as much as possible.
Unlike ZipCar, gas is not included and you must return the car with a full tank. CityFlitz rents Mini Coopers and Smart cars. Oh and get this, there’s free WiFi in the car – damn. Sitting in traffic, load up CN! The service is currently only available in Canada.
The concept behind CityFlitz is great and there’s only one thing that worries me with their ability to be a long-term going concern. Can they continue to sell enough ads to support the cars? No matter what, CityFlitz has people thinking and that’s always a good thing.
Check out my video review of Zipcar below (RSS you just gots to clickthru!). While I have not actually used one of the Zipcars yet, my review is of the web site and my first impressions as a customer. I look forward to using a car in the near future and reporting back on that experience.
The key points from my video:
- The pre-sales web site attempts to make you feel warm and fuzzy – they do a good job of this
- The card pick-up woman was a nasty, rude b**** and ruined my warm and fuzzy
- Renting a car on the weekend seems near impossible (except if you book 2 weeks in advance)
- Renting a car during the week seems easier