Strategy; Variable and Fixed Costs
Zipcar ( www.zipcar.com ) is a car-sharing club founded in Cambridge, Massachusetts, in 1999. The club members pay an annual fee and then have the opportunity to rent a small car (usually a subcompact; the models include the Toyota Prius) for a fixed hourly rate. Zipcar is located largely in select metropolitan areas such as Boston, San Francisco, and Washington, D.C. Members, called “Zipsters,” make reservations for a car on the Zipcar website, and then use an access card to open the vehicle. The vehicle has a “home base” parking spot where the driver picks up and returns the vehicle. The club, with over 500,000 members and 8,000 vehicles, had its initial public offering of stock for public purchase on April 14, 2011, and has great plans for the future, subject to potential competition from the existing car rental companies such as Hertz and Enterprise.
Required
1. What are the fixed and variable costs for Zipcar?
2. What are some of the competitive advantages and challenges of the Zipcar concept?
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