A study conducted by Frost & Sullivan on the carsharing market in 2011, tracked abnormal growth in the number of cars being sold to car sharing fleets and a rise in membership in these carsharing clubs.

In 2009, there were less than 1 million members in carsharing clubs in Europe and North America combined. Frost & Sullivan expects about 15 Million carsharing members in North America alone by 2020.

Spread over 250 college and university campuses, as well as in cities with high population densities, Zipcar holds about 60 percent market share of membership in North America. Its acquisition of leading carsharing operators in Europe such as Streetcar in UK, Avancar in Spain and carsharing.at in Austria makes it one of the global leaders in the carsharing space. The acquisition of Zipcar is a best buy for Avis, as it gives an entry into the cash/operations intensive industry of carsharing.

For rental companies, carsharing is a natural extension to its current product offerings. Avis can also leverage the Zipcar's IT mobility platform to enable rentals using smartphones and bring that technology to its traditional business of car rentals and, in turn, have more rental pick up and drops flexibility in big cities, as opposed to owning expensive real estate space. Zipcar also has its leg in the peer-to-peer (P2P) carsharing space with its investment in Wheelz in early 2012.

Carsharing is a cash-intensive business. The carsharing business is not profitable until it reaches critical mass. It is therefore vital to obtain external funding from investors or governments for new programs to take off. In a resent customer survey conducted by Frost & Sullivan about the voice of customer analysis for carsharing, demand among non-members revealed that about 61 percent of the interested respondents prefer to access cars stationed at a walking distance and majority of them consider a walking distance not be longer than 11 to 20 minutes, so it needs to put in pods in a denser manner. Hence this acquisition is also 'a win' for Zipcar and for it's vital expansion plans as well as to optimize the existing location with that of Avis's and access to a much broader customer base. It also would give access to the corporate clients of Avis to offer corporate carsharing. Currently about 13 percent of carsharing members are corporate customers and this is expected to account for over 25 percent by 2020. It can also take Zipcar to other denser global cities by using the existing Avis infrastructure.

Given that Frost & Sullivan estimates a market of 26 million members globally by 2020, up from around 2.3 million today, this is a good purchase for Avis who so far has struggled getting into new business models for mobility compared to its competitors. Car rental companies need to move away from their brick and mortar business into virtual and flexible vehicle rentals, something that Zipcar provides.

Over 40 percent of Zipcar's members have given up ownership of their personal vehicles, for every car that went into a carsharing club, about 7 to 9 cars were removed from the streets. From the same Voice of Customer connected by carsharing, it is understood that about 40 percent of car owners with one car will consider possibly selling their vehicle after becoming a member of the carsharing service. More importantly, business travelers want to have an integrated service available throughout a country-wide offering. This is the reason why we can also see even the car companies like BMW, Daimler and VW having entered into the carsharing space making it more competitive.

Now in 2013, Zipcar has been bought for US $500 million by Avis and Avis is paying $12.25 per share for Zipcar, almost 50 percent more than the shares were trading at in the end of 2012, and almost 2.5 times of its launch price.