Zipcar's True Economics

I've been a loyal Zipcar customer for about 10 years since they launched in NYC. I've trumpeted it and had quite a few friends sign up. I've stayed loyal through many customer service and billing gaffes in the early years. They're generally a better run organization in that sense today. However, I've been disappointed to see this "growing up" means hiring of professional marketers well versed in BS and deception about the true economics of Zipcar.

Over the past few years they've put out some outrageous comparisons of Zipcar vs. car ownership and rentals. They were called on one particularly egregious one which no longer exists on their site. However, they still seem to struggle with reality. On this page, they compare a NYC rental vs. Zipcar. They show savings of $13 per day with Zipcar. But its almost an insult to our intelligence how they come to this figure.

Notice how a car rental has $10 in parking charges and $2.90 in other "additional fees" not subject to Zipcar. What they hell are these? Zipcar, if I'm taking a daytrip, my Zipcar and my rental are going to be subject to the same parking costs. I'm not going to reserve a Zipcar and just park it back in its spot (their argument for why this parking charge only applies to rentals). That's a complete farce. Second, what are these mysterious "additional fees"? We all know that rentals can suffer from cost creep but when I book a rental now I get an all inclusive day rate that doesn't include any additional fees (and includes taxes which Zipcar doesn't). Third, Zipcar conveniently chose their weekday rates (Mon-Thu). Zipcar is far more widely used on the weekend and that's generally when people make day trips. The weekend day rate for a Mazda 3 (cheapest car in their fleet) is $103.50. So the reality is Zipcar is far more expensive than a NYC rental as the $13 difference is from their made up figures and the real Zipcar rate is far higher. Zipcar actually costs you $26.50 MORE PER DAY.

Now, let's extend this model into other realistic options one has vs. Zipcar. NYC rentals are expensive. Around double what they are in any surrounding suburb. When we do our typical weekend or longer trip upstate, we are increasingly using rentals just outside the city. Here are some economics Zipcar doesn't talk about for multi-day reservations:

	Zipcar	Avis White Plains (easy 40 min train ride)
Day rate	$103.50	$38 (I have a midsize reservation for Labor Day at this rate)
Taxes (~ 20% in NYC)	20.70	included
Gas	included	$20 (this is conservative as we'll drive 150 mi @ 25 mi/gal and $3/gal)
Insurance	included	included
Train/Cab	N/A	$30 (off-peak round trip)
NYC Tolls	8.00	none
Total	$132.20	$88.00

That's a savings of around $45 PER DAY or Zipcar being 50% more expensive. When you do this for 2-4 days that's hundreds of dollars. Yes, its a bit less convenient to have to take a train but they run twice an hour on weekends. Plus, we get to avoid the legendary Friday weekend traffic out of NYC. We actually net out to the same door-to-door time. But Zipcar won't tell you this.

I want Zipcar to work. They are correct that it is more convenient. However, they significantly raised their rates a couple of summers back when gas went over $4/gal. I understood that but the problem is they never lowered their rates when gas went back toward $2/gal and now runs in the $2.50-3 range. Nothing like pocketing those margins.

The other issue that Zipcar never talks about is how they are subject to the NYC rental car tax which runs about 20% on top of their costs. This was a ruling against them several years ago which is unfair as Zipcar is to the benefit of locals not tourists. However, I've not seen them fighting this at all and it adds a huge surcharge. Yes, NYC rentals are also subject to this but my White Plains rental includes all taxes in that $38 day rate.

Sadly, its also become where car ownership vs. Zipcar is about the same. The figures they post on their site for that are also a farce. Their default value for car payment + finance charges are nearly $350/mth. I can get a much nicer car than the cheapest Zipcar models for that.

Zipcar doesn't add up but they proffer falsehoods to make them look economical. I once did about $400/mth with them but I'm reducing that significantly now. Once we get to gen 2 of electric cars I'm fully ditching Zipcar.