Zipcar's (Nasdaq: ZIP) new president of its European operations, Frerk-Malte Feller, definitely has a name that sounds good in any European accent. But will Feller's experience at eBay (Nasdaq: EBAY) help him maneuver Zipcar's growth around those tight Alpine turns, while avoiding all those bicycles?
A quick bio
Feller began at eBay in 1999, launched and became managing director of PayPal Germany, Austria, and Switzerland in 2004, then head of eBay Germany in 2008. eBay likely saw Feller as a manager for growth; when revenue slowed in Europe, it moved him to manage PayPal Australia in 2009. How did eBay perform during his reign?
Unfortunately, eBay fails to break out the specific revenue at PayPal Germany or Australia. The numbers do show total eBay revenue growing in Germany from $718 million in 2005 to $1.14 billion in 2009, and total revenue from the payments segment (both PayPal and Bill Me Later) grew from $697 million in 2004 to $2.7 billion in 2009. This at least implies that he didn't destroy any markets.
One mistake
One German news story on Feller alleges that while he was head of eBay Germany, he illegally sold soccer tickets on the site without following employee disclosure rules, while also not trusting PayPal's own security. He actually required extra identification information if the buyer used PayPal. This seems like only a small indiscretion and not a red flag for any future wrongdoing. I would not be worried that Feller's going to start drag racing Zipcars or trafficking items in Zipcar trunks.
Zipcar across the pond
Research firm Frost & Sullivan projects the EU car-sharing market at $5 billion, half of the $10 billion annual estimate of the global market. To grab a slice of this, Zipcar expanded to Europe through a December 2010 acquisition of the U.K.-based Streetcar and this past December's acquisition of Spain's Avancar.
But the European car industry differs from the U.S. For example, Europe is increasingly hostile toward cars, with car lanes converted into bike lanes, limited parking space allotments for new buildings, and congestion charges in downtown areas. Additionally, car ownership rates in Europe are much lower than in the U.S.:
|
Country |
Vehicles Per 1,000 People |
|---|---|
|
U.S. |
812 |
|
Great Britain |
515 |
|
Spain |
564 |
Source: Vehicle Ownership and Income Growth, Worldwide.
How can Zipcar and newly hired Feller entice car-averse Europeans? No matter what the language, saving money speaks well. According to a report sponsored in part by the EU, given about 7,500 miles worth of driving over a year, a business saves about 1,000 euros, or $1,280, while a private customer saves slightly less.
This same report also details the European competition that Zipcar must fight. Mobility, a Swiss car-sharing company, already claims an astonishing 1.1% of Switzerland's total population as registered customers. In Germany -- the largest European car-sharing market with 137,000 customers (compared with about 650,000 current Zipcar members) -- there are already 110 different car-sharing providers. In Italy, the government happily funded various car-sharing costs for local companies, including half of the capital investment spent setting up infrastructure. As the EU melts down, Italy may have changed this policy, but it has already given a leg up to local providers.
And the other competition
Big names have yet to match Zipcar's geographic reach in the car-sharing market. Hertz (NYSE: HTZ) runs its On Demand service abroad in Paris, London, Madrid, Berlin, Melbourne, and Sydney. It also advertises its advantage of one-way trips, though those are only available between Manhattan and New York City airports. Avis (Nasdaq: CAR) has yet to enter the domestic car-sharing fray, but it runs a strikingly similarly named Avis On Demand in Paris. It is launching Avis On Location, which gives business customers access to cars parked right outside in their corporate parking lots. Daimler AG's (OTC: DDAIF) car2go, built on a fleet of Smart cars, operates in Germany, Amsterdam, Austria, Austin, San Diego, and Vancouver, with plans to expand to Washington, D.C., and France.
It's Feller's move
Competition aside, Feller must prove Zipcar's viability in the more car-averse and potentially more competitive markets abroad. It seems he performed well at eBay, and Zipcar CEO Scott Griffith justified his decision as, "Malte's highly relevant experience with introducing and scaling innovative and disruptive businesses in European markets positions him well to head-up our European expansion efforts."
Even if you don't think Zipcar will conquer Europe, take a look at these three companies our analysts think will take over the world in our free report: "3 American Companies Set to Dominate the World." Thousands have already requested access. Simply click here -- it's free.
