Zipcar and Flexcar Driven Together

Case is rolling his entire stake in Flexcar into the new company and is betting that the newly merged firm can one day be as transformative as another company that reoriented American habits.

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"By having one brand, you will get more awareness and ubiquity, and that's partly what has driven the recent success of Starbucks," Case said. "Only when they had enough critical mass in terms of brand and retail footprint, they became part of everyday life. And we are trying to get to that point. I really do believe it's the smart solution to urban dwellers, like in D.C. "

Although neither company has turned a profit, Zipcar said it makes money in "established" markets, defined as areas it has served for two years or more, including Boston, New York City, Washington and San Francisco. The District and San Francisco are the only cities where the two companies overlap. The company will have cars in other cities, including Portland, Ore., Atlanta, Pittsburgh, Philadelphia, Los Angeles and San Diego, as well as in university towns like Ann Arbor, Mich., and Chapel Hill, N.C.

"This allows us to get to scale much faster," Griffith said. "This will allow us to continue to invest in technology and . . . the Web site and to expand the size of our fleet."

Neil Abrams, an auto-rental consultant, said a bigger vehicle fleet could lead to profits.

"There is a threshold under which it's hard to make money," he said. "You need to get to that threshold where economies of scale kick in, where insurance is leveraged across a lot of rentals and you have lower financing costs for vehicles. Each company was a few thousand cars away from reaching those economies of scale. One you have the fleet, you have to strategically position the cars so that they are close to their market and very, very accessible."

Staff researcher Richard Drezen contributed to this article.