Can Big Rental Companies Succeed in Car-Sharing?

Avis Budget Group Inc., along with Enterprise Holdings Inc. and Hertz Corp., are all moving into the space defined by Zipcar, lured by urban consumers who embrace an easier rental experience where vehicles can be rented by the hour.

The market has grown to a nearly a $400 million business in the U.S., according to Avis. By acquiring Zipcar, Avis now owns the technology underpinning Zipcar’s success. But Avis will need to be careful about how it integrates Zipcar’s software, or it might end up stripping out all the business management processes and user experience that makes the service convenient and user friendly.

Traditional car rental companies entering the car sharing market have the back-end infrastructure for managing large fleets, said Ratika Garg, industry analyst for automotive and transportation at consulting firm Frost & Sullivan. But, they’ll have to develop better user experiences for customers, she said.

Zipcar’s mobile and web-focused rental engine embraces a spontaneous rental experience light years from the block-long rental lines found at many airport-based incumbent rental agencies.