Madison’s Community Car was a pioneer in car-sharing services, appealing to people concerned about the environment as well as those who don’t want to buy a car or can’t afford one. Now, a national company is taking it over.
Zipcar announced last week that it has acquired the company. It’s not clear how the transition will work for Community Car’s 1,300 members, some of whom have paid as much as $1,500 in advance for discounted driving plans.
Although the companies charge different rates, “Zipcar will honor Community Car balances and roll them into the member’s new Zipcar account,” says Katelyn Chesley, public relations specialist for Boston-based Zipcar. “Additionally, all Community Car members will receive free membership for the first year and $35 in driving credit.”
Zipcar declines to tell Isthmus what will happen if Community Car members request a refund instead of transferring, but says all queries will be handled “on a case-by-case basis.”
“For any member, our goal is to ensure the best member experience possible,” says Chesley. “For those that were Community Car members, and those that we hope to become Zipcar members in the future, we’ll fully make sure everyone is satisfied.”
Community Car members paid an annual membership fee in order to rent cars at hourly rates, which covered gas and insurance. The basic rental rate was $10 an hour. Discounted rates were available with advance payment or by paying an extra flat monthly rate. Members who purchased a 12-month “Smart Advantage” plan for $1,500 got a $7.50 rate. “Freedom 500” members paid $500 in advance for an $8 rate.
According to its website, Zipcar’s Madison rates range from $8.50 to $10.50 an hour. Zipcar also offers prepaid plans. None are apparently yet available in Madison, but Chesley cites Milwaukee’s. That city’s most generous prepaid Extra Value Plan offers hourly rates that start at $7.65 Monday through Thursday, and $8.50 Friday through Sunday.
Community Car founder Sonya Newenhouse dismisses concerns about the varying rates.
“That’s just semantics,” she says. “[Zipcar] doesn’t have the same [prepaid] plans that we do, right? So if they are buying our company, they actually can’t offer our plans, right? Because it’s not in their system. But what they are honoring is to have the best solution for each customer, so no customer is going to pay more.”
Community Car began in October 2003. At its peak, the company had 19 vehicles. At the time of its sale it had 12 vehicles and a staff of four. Zipcar started in Cambridge, Mass., in 2000 and opened in Madison in 2011. Avis Budget Group bought it in 2013 for roughly $500 million. Zipcar is “in 31 major metro markets,” says Chesley. “Globally, we’re in seven different countries. We have over 10,000 cars in our global fleet.”
Both Chesley and Newenhouse decline to disclose Community Car’s purchase price, which does not include the cars, which will be sold.
Zipcar will increase its number of vehicles here from 20 to 30. “We are only acquiring certain assets, including Community Car’s member base, their parking locations and their fleet manager,” Chesley says.
Newenhouse initiated sales talks with Zipcar in late winter/early spring. Why not find a local buyer or — as has been done in other instances — offer members the chance to organize as a co-op? “Zipcar was the best choice because they’re up and running,” she says. “They’re the world’s leading car-share organization.”
Newenhouse will not disclose how many Community Car members had prepaid plans. Chesley will not disclose the number of members Zipcar has in Madison or in Wisconsin.
Newenhouse is confident about the transition. “They’re actually hand-contacting, they’re physically calling, it’s not just email — they’re calling every single person that has a prepaid plan and finding the best solution for them,” she says.
Zipcar was sued in 2009 for allegedly charging customers five kinds of “excessive or hidden” fees, according to The Boston Globe. All the fees but one were found to be legal, and the case was dismissed in 2010.
On its face, a provision in Community Car’s Member Handbook — written to prevent customers from sharing memberships — appears to forbid the sale of the company until prepaid contracts expire. Item 8.2 specifies that rights “are not assignable or transferable to third parties, in whole or in part.” Zipcar could be interpreted to be a third party.
Jerad Albracht, spokesman for the Wisconsin Department of Agriculture, Trade and Consumer Protection, notes that his department has no regulatory authority over the companies. However, if his department “receives a complaint alleging a violation of consumer protection statutes, [it] would investigate the complaint and take appropriate action, which may include mediation or other methods of resolution.”
Editor’s note: The author has been a Community Car member since 2010.
