American taxpayers, the new investors in the auto industry, have some cause to worry about their investment, even when the economy comes back. Have you heard the term “car-shedding?”
Many families that once needed two cars may be able to get by with one, thanks to Zipcar.
Zipcar, if you haven’t heard of it, is the best known of the companies that puts near-home, instant rental cars out in urban neighborhoods. You reserve cars by phone and access them by flashing a membership barcode at a scanner in the windshield.
Zipcar says that for every car it places at scattered sites for rental, 15 cars are given up. Shed. Gone. City CarShare in San Francisco has comparable numbers. Zipcar now has about 5,000 rental cars, replacing about 75,000 owned cars, and is growing fast.
According to Newsweek Magazine, Hertz, Enterprise and U-Haul have seen Zipcar’s growth and have all launched similar rental programs. They expect their instant car rental services to grow faster than Zipcar’s because they already have national networks and names to build on.
Car-shedding doesn’t mean ditching all your cars. It means matching much more selective use of cars with transit, bikes, walking, home delivery services and other creative strategies. It often means owning one car instead of two, or two instead of three.
The Zipcar business model probably only works in high-density neighborhoods. But that definition of neighborhoods includes virtually all suburban apartment buildings and all the single-family homes around them for at least a three-block area.
And it is not hard to imagine an exurban or rural version of Zipcar emerging. Households owning small gas sippers, as many already do, would drive to a instant car rental location, say a gas station or a general store, to rent whatever car with special carrying capacity they needed for a special trip.
What drives car-shedding? Savings. Zipcar estimates that its members save $6,000 a year. Even if that is a gross figure, not including, say, transit spending, it still amounts to real money.
Assume that Zipcar or various versions of it achieve significant reductions in car ownership. In addition to reducing the market for cars, it would change the market for types of cars. Demand might still be strong for very small cars with little carrying capacity beyond one or two people. Demand might shrink dramatically for many of the larger cars we own now.
My point is not that any of these guesses are necessarily correct. But if, in many markets, one rental car can replace 15 owned cars, we should not assume the market for cars will be what it was in the past. If Hertz, U-Haul, and Enterprise are betting on this model, it deserves serious attention.
* Patrick H. Hare is a housing and transportation consultant and author of “Planning, Transportation, and the Home Economics of Reduced Car Ownership.”
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