Have decreases in driving trends affected car-sharing giant Zipcar?

250 college campuses nationwide have adopted the Zipcar system (LIR Photo by Jim Mancari)

When James Yates chose to attend Hofstra University, he figured he would rely on public transportation as a way to get around. Being from Palos Verdes Estates, Calif., Yates’ only options would have been to ship or drive his car across the country.

While he often took cabs, he wound up bugging his roommate to constantly drive him around town. Yates had very little independence.

However, Yates discovered that Hofstra had Zipcars located on campus and signed up for an account. Now, when Yates needs to go somewhere, all he does is reserve a campus Zipcar either on his computer or even iPhone, swipe his Zipcar card and he’s on his way.

250 college campuses nationwide have adopted the Zipcar system (LIR Photo by Jim Mancari)

250 college campuses nationwide have adopted the Zipcar system (LIR Photo by Jim Mancari)

Zipcar founding

Originally founded by two Harvard University professors in 1999 as a way to cut down on excess carbon dioxide emissions from vehicles, Zipcar is a car-sharing system that currently serves over 400,000 members worldwide—making it the largest provider in the car-sharing market. “Zipsters” pay a $25 application fee, an annual fee of $50 and then pay a $7-17 hourly rate. Unlike regular car rentals, the Zipcar hourly fees cover tax, fuel and insurance on the vehicle, and the cars often have designated parking spaces.

However, the overall reaction to Zipcar in its 13-year history has been mixed.

“It’s like a gym membership,” said Richard Dinh, a former Zipcar member from Manhattan. “The more you use it, the more it’s worth it.”

But for college students, the system can be a viable transportation alternative.

“It’s much cheaper than having a car,” said Yates, a sophomore finance major. “You don’t have to pay for gas, and you don’t have to pay for insurance. It’s nice to not have your car here but to have a car when you need it.”

Zipcar seems pretty convenient for college students, right? But if that’s the case, why haven’t more campuses adopted the car-sharing system? The National Center for Education Statistics lists nearly 4,200 four-year and two-year college campuses in the U.S. Of these, approximately 265 have Zipcars—less than 6 percent.

Decreases in driving trends

This figure might be related to the fact that young people in general are driving far less and are instead increasing their use of public transportation. On April 5, 2012, the U.S. Public Interest Research Group (PIRG) released a study, “Transportation and the New Generation: Why Young People are Driving Less and What it Means for Transportation Policy,” detailing recent trends in transportation habits showing the first overall decrease in driving since World War II.

The 2011 study examined Federal Highway Administration data as well as statistics from the U.S. Dept. of Transportation. These trends were compared with U.S. Census data and other forms of polling data to arrive at the conclusions.

The results reveal that the average American is driving 6 percent fewer miles per year than in 2004. Young people, defined as age 16-34, drove 23 percent fewer miles in 2009 than in 2001. That same group traveled 40 percent more miles using public transportation between 2001 and 2009.

According to U.S. PIRG, advances in technology have accounted for the decrease in driving. Many young people are plugged into social media networks constantly and can remain online easily using public transit. Additionally, technological advances in methods of travel, such as bike-sharing or car-sharing programs like Zipcar, have accounted for the changing trend.

Increasing fuel prices have also played a role in the decrease in driving. According to the latest Lundberg Survey—an independent market research company that reports fluctuations in local and national fuel prices—the average U.S. gas price per gallon rose more than 11 cents in the month of March.

Trends possibly benefit Zipcar

With fewer drivers on the road, it would seem that the Zipcar service would be experiencing a decline in business. However, it’s possible that the overall decrease in driving has benefitted Zipcar’s business, since drivers will reserve a car only when necessary rather than own one.

“I don’t think of that 6 percent (of college campuses that have Zipcar) as necessarily low,” said Phineas Baxandall, senior transportation analyst for U.S. PIRG and co-author of the April report. “It takes a while for these things to happen. I would think that the growth of car-sharing would go hand-in-hand with the growth of public transit.”

In fact, Zipcar reports that its business is steadily increasing.

“We are growing faster than ever right now,” said Mike Serafino, general manager of Zipcar University, which manages all college campuses that have adopted Zipcar and are not located in a major metropolitan area. “Last year was a banner year for us in having added about 45 new schools.”

Zipcar for college students

A large portion of Zipcar’s marketing campaign is focused directly on the demographic of college students, who are overly conscious of their spending habits. The online textbook rental company Chegg reports that students are spending almost $500 monthly on food, clothing, personal care, travel and other expenses, so this group is arguably the most sensitive to swings in the economy.

Many colleges do not allow students to have cars on campus for at least their first—and sometimes second—year in school, so having a temporary method of transportation is a popular alternative. In most cases, the minimum age to rent a car is 25, but Zipcar allows rentals to anyone with a valid driver’s license. This is particularly beneficial to international students, especially since Zipcar will accept a license from any country.

Students also receive substantial discounts for using Zipcar. Though the average hourly rate is $8-9, students generally pay $7-8 per hour. Additionally, students pay an annual fee of $25 for their first year and $35 for subsequent years—a decrease from the normal $50 annual fee. Finally, the initial $25 application fee is waived for students.

Of course, the Zipcar system is not conducive to every college campus in the country. Some campuses have ample parking spaces or other transportation systems in place, and thus Zipcars aren’t even discussed.

“If students came to me asking about a car-sharing program, we would be open to that,” said Joseph Goodrich, manager for parking and transportation services at Adelphi University in Garden City. “But we haven’t had any interest from the students.”

Adelphi pays students and employees $5 per day to park in an off-campus lot and then take a shuttle to campus due to the limited parking.

As driving trends continue to decrease, car-sharing systems like Zipcar may experience a decrease in business since people are simply driving less overall.

But for now, Zipcar—especially for college students—will continue to provide students with a convenient method of transportation when they need it.