Car-Sharing Moves Into the Fast Lane
By Matt Palmquist

(Business 2.0) – Owning a car in a big city can be a major hassle. Which is why car-sharing services are taking off as a cheap, easy alternative. For as little as $50 a month, members get 24-hour access to vehicles parked around a city and borrow them by the hour or the day without paying for gas or insurance. Until recently, that has been a mostly local and often nonprofit venture. But Zipcar and Flexcar, the biggest car-share companies in the United States, are expanding into multiple cities and making money in the process. They're vying to dominate the $15 million U.S. car-share business, which ABI Research says could grow more than 10-fold by 2009.

Launched in 2000 in Boston, Zipcar offers 400 cars in cities along the East Coast. The firm has raised more than $10 million in venture capital, and with 90 percent membership growth last year, it recently went into the black. Zipcar CEO Scott Griffith says he plans to keep expanding into cities where parking is a pain and mass transit provides easy access to the cars.

Rival Flexcar has moved its 350-car fleet into Los Angeles, Portland, Seattle, and Washington, where it's going head-to-head with Zipcar for the first time. With backing from Honda, it expects to hit profitability by early 2005. Both companies boast more than 20,000 members and are seeing the most growth among corporate customers looking to save money on rentals and taxis. "Right now there's room for two players," says Flexcar CEO Lance Ayrault. "But we want to be the car-sharing company." Let the race begin. — MATT PALMQUIST