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“Getting into the share economy was the reason Avis Budget Group last month chose to pay a whopping $500 million for Zipcar, despite the fact that the pioneering rent-by-the-hour startup generated a paltry profit of $4.7 million over the past year. But Zipcar in some ways misses the larger point of what’s going on: Its fleet, as with Avis’, has been centrally owned. A more profitable model may lie in peer-to-peer car-sharing services such as RelayRides and Getaround, which mimic Hertz or Avis except that the service itself owns nothing. Their fleets, about 50,000 combined at last count, draw from the tens of millions of autos idling in America’s driveways. SideCar and Lyft slice that market finer, monetizing an empty seat by letting owners tote along fee-paying passengers on routes they may already be taking.”

1. We can reduce traffic accidents by 90%.
2. We can reduce wasted commute time and energy by 90%.
3. We can reduce the number of cars by 90%.

I know that in my neighborhood Zipcar has increased the availability of parking spaces by making it possible for many residents, myself included, to live their lives without owning a car. Zipcar allows me to go places I have to go and cannot reach by bicycle or public transit. It frees up the parking space where my car used to sit for well over 90% of each year, weathering, depreciating and hemorrhaging taxes and insurance premiums. And it saves me money and almost two hours per r/t over traditional car rental.

Meanwhile, from Avis’s point of view, it’s buying the clear leader in what is probably the future of car renting. We’re only at the beginning of a long secular decline in the number of cars owned per household: as America becomes increasingly urban, there’s much less need for households to own a car, or a second car — and it becomes much cheaper to just rent cars by the hour or the day when you need them than it is to own a car outright and just leave it parked and useless for 99% of its life.

And Autoshare's founder and CEO, Kevin McLaughlin has provided a nice overview of the implications of the Avis-Zip deal, as well, in this CBC interview.  He reminds us that while this may signify another step in carsharing going mainstream, it also is part of the larger story of a growing number of peoples' changing relationship to their car and personal transportation, in general. 

It's worth noting that when the merger happens Avis will becomes the #2 largest car rental company in the US, slightly ahead of Hertz, but still a fraction of Enterprise's fleet, according to Auto Rental News statistics.  And nobody seems to have noticed that Avis now has a window into the peer to peer carsharing space, as well, because of Zipcar's substantial investment in Wheelz.

The acquisition solves a number of problems with the Zipcar model. For one thing, it gives Zipcar easy access to the one thing it needs more than anything else: money. The car-rental business is at heart a financing business: you need to be able to finance the acquisition of new cars, efficiently dispose of them once they get too old and too used, and generally make profits by juggling enormous cashflows both coming in and going out. When you’re a small and risky company like Zipcar, that kind of fleet and cash management is much harder than when you’re a giant like Avis Budget.

For many of us, achieving the dream of not owning a car would necessitate near guaranteed access when we did need one. Zipcar, or a service like it, would have to approximate the “magic rental store” described by Kevin Kelly in his essay “Better Than Owning”.

So how will that audience take to “the man” stealing one of their own? You don’t want to mess with something unique, such as Zipcar’s carefully built culture. Traditional companies have a way of screwing things up when they get into the young and the new. (Look at News Corp’s acquisition of MySpace, though MySpace was already a sinking ship anyway.) What if Avis tries to offer Zipsters points in its loyalty program or tries to sell additional liability coverage? What if the marketing turns more traditional, or worse, tries to be hip but doesn’t get it? Would the crowd abandon the room?

“Car sharing is not car rental and I’ve known that from the beginning, and the question is — does Avis understand that? Will they be able to maintain a cutting edge innovation and bring together a community of people who want to be co-creators and participants in a new style of consumerism? That will be the question,” Chase said.

Oh, sure, Avis executives will say how they respect Zipcar — its culture and itsway of doing business — and promise to preserve it. But a year down the road when it comes to some decision in which they will have to forgo some cost savings or some revenue increase in order to maintain those differences, the decision will be to do it the “Avis” way. And that will be it: Zipcar as we know it will be history.

If there is going to be one theme for 2013, then it is the inevitable march of technology (and the Internet) into everything we do and every aspect of our daily life. From car dashboards to rental cars – the fun is just getting started.

And this was probably as good an "exit strategy" for Zipcar's investors as they could hope for.  While some people think they came out okay (but without the the huge profits they once hoped for), such as Lizette Chapman in the Wall Street Journals Venture Capital Dispatch, she makes a good point about the future

Going forward, a big question in venture capital is whether any new transportation models like ride-sharing companies Zimride Inc. or on-demand car services such as Uber will thrive.

By the way, this article is an excellent quick summary of the bumpy ride carsharing VC investors have seen over the years.

I've reviewed a number of business plans for startup carsharing companies and just about all of them hypothesize a rental car company taking them over.  Zipcar did it!  (Admittedly, taking the long way.)  What hasn't been widely acknowledged in these reports, that now seems obvious to me at least, is that it's likely Zipcar's investors have been trying to find a way out for quite a while — starting with the run up to the IPO and now this.