Renting a car by the hour is now mainstream.
Enterprise Holdings Inc. has acquired the car-sharing company Mint Cars On-Demand, a move that gives the national car rental chain a bigger presence in the growing on-demand rental market and challenges another traditional rental car company in what was until recently considered an alternative industry.
Mint Cars, of New York, launched in Boston early last year and has 8,000 members in the two cities. The financial terms of the deal were not disclosed.
Car sharing has become increasingly competitive in Greater Boston, home to industry leader Zipcar Inc., based in Cambridge. Hertz Corp., of New Jersey,recently expanded its on-demand rental service in the region, while RelayRides, a San Francisco company that signs up people who make their own cars available to share, entered the local market in 2010.
The acquisition of Mint Cars will allow Enterprise to break into the Boston and New York car-sharing markets without starting from scratch, said Ryan Johnson, assistant vice president for Enterprise Holdings. With dense populations and extensive transit systems, the cities have large numbers of residents who don’t own cars.
“New York and Boston are wonderful markets for car sharing,” Johnson said.
Zipcar pioneered car sharing in the United States in 2000, targeting young, carless city dwellers who need vehicles for a few hours to run errands or visit friends. Car sharing operates on a membership model, with technology that allows cars to be reserved online for as little as $6 an hour and picked up at numerous locations.
Since Zipcar launched its operations, car sharing has become a more than $350 million industry with as many as 800,000 members in North America. And the sector that is projected to grow 20 to 30 percent a year through 2018, according to research and consulting firm Frost & Sullivan.
This projected demand has sent traditional rental car companies scrambling to get into the on-demand market. With the added convenience and flexibility of hourly car rentals, which can also be rented by the day, more consumers may gravitate to hourly rental cars, analysts said.
“It’s a very lucrative opportunity,” said Ratika Garg, a car-sharing analyst at Frost & Sullivan.
Enterprise, a $14 billion company based in St. Louis, operates Enterprise Rent-A-Car, National Rental Car, and Alamo Rent A Car and has established several car-sharing services around the country in recent years. With the addition of Mint Car, Enterprise now has 58,000 members for its on-demand rental services. By the end of the year, Enterprise will operate all its car-sharing services under the brand name Enterprise Car Share.
The $8 billion Hertz Corp., which has car-sharing operations on college campuses and in a handful of US and European cities, started expanding its hourly rental service last fall. It now has 130,000 on-demand members around the world.
Last month, Hertz announced that it plans to equip its entire North American fleet — about 370,000 cars — with hourly car rental technology by next year. Enterprise’s car-sharing expansion “validates what we have been thinking, and it validates why we have been expanding aggressively,” said Hertz spokeswoman Paula Rivera.
RelayRides operates on a different business model, with members sharing their own cars with one another for an hourly fee. As of March, it was offering services in 24 states.
With $242 million in annual revenues, Zipcar is much smaller than its traditional rental car competitors but controls three-quarters of the North American car-sharing market and has 709,000 members worldwide. The company reported profits in the third and fourth quarters and expects its first annual profits this year.
“Enterprise’s acquisition of Mint is yet another validation of the market potential of car sharing, which is estimated to be a $10 billion global industry,” said Zipcar president Mark Norman. “Clearly there is room for other entrants.”