Correction to This Article
An article in the Sept. 5 Business section about shared car services incorrectly said Flexcar recently posted an inquiry about available parking spaces on a Yahoo group message board. Another company, Zipcar, posted the message.

Car-Sharing Merges Into the Mainstream

By Sara Kehaulani Goo
Washington Post Staff Writer
Tuesday, September 5, 2006

For more than a year, Michelle Brown eyed the Zipcars parked across the street from her Penn Quarter restaurant. The co-owner of Teaism, a popular tea house, plotted and pondered and then, two months ago, she took the plunge.

Now, every morning, the chefs at Teaism prepare salty oat cookies and sandwiches and load them into a Honda Element owned by Zipcar so they can be delivered to the restaurant's two other District locations before noon. Brown figures the shared-car service saves her a couple of hundred dollars a month on gas and parking.

"I love getting in a car that's clean, that's new, that's responsive, that's well maintained and has gas in it," Brown said. "When my car was used for the runs, I'd get in my car and have lentil soup [spilled] in the back."

Brown is one of a growing number of business owners using shared-car services instead of their own vehicles. No longer a curious fad, the services boast 530 shared cars in the Washington area, making them increasingly attractive to new kinds of customers, including universities and businesses.

Within the past year, the area's two shared-car services, Zipcar and Flexcar, have both received $20 million in private investment that they plan to use to expand. Using their popularity among politicians and transportation policymakers, the firms are aggressively cutting deals with cities for parking and marketing promotions.

The companies charge an annual membership rate of $35 to $50, plus hourly fees of $7.25 to $9 to rent a car, which includes gas and insurance. Cars are reserved online or through a toll-free number, and each member is given a keyless entry card to access the car. Part of the appeal is that both firms offer a range of vehicles -- from high-end BMWs to pickup trucks to Mini Coopers. Many major cities have at least one company, but only the District and San Francisco have two firms vying for customers.

In time for the new school year, District-based Flexcar expanded its deal with the University of Maryland to allow students 18 and older to join. Before, the companies could not accept members younger than 21, but Flexcar said it reached agreements with its insurance companies to lower the limit. Zipcar, which has an arrangement with George Washington University, offers 17 vehicles on campus for employees and students over 21.

America Online co-founder Steve Case was behind the investment at Flexcar, which announced a new management team earlier this summer, including a new chief executive, Mark D. Norman, who hails from the auto industry. "The whole opportunity for growth is a great benefit to our members," said Norman, formerly chief executive of DaimlerChrysler AG's Canadian operations. "With the additional cars, the benefits of the network effect continue to snowball."

Within the past year, Flexcar doubled the number of cars in its D.C. fleet. Norman said that this year, he expects the pace to be just as fast, if not faster, as it expands neighborhood by neighborhood and into new cities.

Adams Morgan resident Aurelie Shapiro said she has been a Zipcar member for four years and recently noticed a huge increase in the number of cars available. "I used to complain on weekends that you could never find a car, especially in the spring when it's nice outside," Shapiro said. But in the past year, that's changed. "I noticed there's a lot more cars. They've added a ton more. There's one near my work in Silver Spring."

Both firms, which are privately held and do not disclose revenue, say they are more focused on expanding the business than on profitability, which is a longer-term goal.

Zipcar is profitable in all of its markets, said Matt Malloy, vice president of sales and marketing for the Cambridge, Mass., company, but he would not say how much it makes overall.

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