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Carsharing Rapidly Gets More Popular, But Where Are The Profits?

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Fueled by consumers disillusioned by the rising cost of driving and with less desire to own their own vehicles, the car sharing industry is growing rapidly.

So rapidly, predicts Navigant Research, that global membership is forecast to have grown from around 2.3 million at the beginning of 2013 to as much as 12 million by the end of the year.

But as the industry grows, these companies need to move from rapid expansion into profit generation.

It's something that Zipcar struggled with, despite being the biggest car sharing company in the world. Rapid growth allowed it to finally report a net income in 2012, the first profitable period after 12 years in business.

It's possible that the industry's fast growth could see other companies doing the same, though the industry does involve high overheards. Zipcar's acquisition by rental giant Avis was expected to reduce this a little and Zipcar has so far retained its brand identity--car sharing companies enjoy a more cosmopolitan, high-tech image than regular rental firms.

Navigant predicts that most car sharing companies go down the merger route or get purchased by larger firms, which could include major automakers as well as rental firms.

Several automakers--namely GM, BMW and Daimler--have already initiated car sharing programs in cities around the world, possibly hedging their bets for a future where car ownership may continue to decline. It's also a good way of introducing people to your brand--with the possibility of them buying a vehicle they're fond of at a later date.

Other routes to car sharing profitability could be in selling expertise in fleet management.

Zipcar is doing just that for New York and Houston, while in Europe, Renault is using software developed for the Twizy electric minicar to operate some Twizy-based car sharing services.

In all, Navigant's research suggests that car sharing has enjoyed a 30 percent compound annual growth since 2006, when the Transportation Sustainability Research Center at UC Berkeley put membership numbers at 350,000 globally.

While future levels of growth are a relative unknown, it isn't hard to see the industry becoming very big indeed--and profits will surely follow.

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