According to Frost & Sullivan partner Sarwant Singh and automotive & transportation consultant Mohamed Mubarak, the acquisition is a best buy for Avis, as it gives an entry into the cash/operations intensive industry of car-sharing, which both its close competitors, Hertz and Enterprise, are already present in.

Frost & Sullivan says that car-sharing fleets have seen a rapid rise in both the number of cars being run and membership. In 2009, there were less than one million members in car-sharing clubs in Europe and North America combined. Frost & Sullivan expects about 15 million car-sharing members in North America alone by 2020.

Zipcar offers hourly rental services in 20 major metropolitan areas in the United States, Canada and Europe and has more than 760,000 members. It holds about 60% market share of membership in North America. Its acquisition of leading car-sharing operators in Europe such as Streetcar in UK, Avancar in Spain and car-sharing at in Austria makes it one of the global leaders in the car-sharing space.

Frost & Sullivan said: ‘For rental companies, car-sharing is a natural extension to its current product offerings. Avis can also leverage the Zipcar's IT mobility platform to enable rentals using smartphones and bring that technology to its traditional business of car rentals and, in turn, have more rental pick-up and drops flexibility in big cities, as opposed to owning expensive real estate space. Zipcar also has its leg in the peer-to-peer (P2P) car-sharing space with its investment in Wheelz in early 2012. So it gives a diversified entry for Avis in the entire car-sharing market.’

It added that car-sharing is a cash-intensive business that is not profitable until it reaches critical mass and that it’s vital to obtain external funding from investors or governments for new programmes to take off.

Frost & Sullivan commented: ‘Hence this acquisition is also “a win” for Zipcar and for its vital expansion plans as well as to optimise the existing location with that of Avis's and access to a much broader customer base. It also would give access to the corporate clients of Avis to offer corporate car-sharing. Currently about 13 percent of car-sharing members are corporate customers and this is expected to account for over 25 percent by 2020. It can also take Zipcar to other denser global cities by using the existing Avis infrastructure.’

Frost & Sullivan also pointed out the rise in valuation of Zipcar. When it went for an IPO in April 2011, the company, founded in 2000, owned under 9000 vehicles and was valued at $174m. The share value on Zipcar's first day of trading surged by almost 75% to $31 per share, boosting the valuation of the company of around $1.2bn. Now Zipcar has been bought for $500 million, which is paying $12.25 per share for Zipcar, almost 50% more than the shares were trading at in the end of 2012, and almost 2.5 times of its launch price.