Another by-the-hour car renter rolls into Boston

By Katie Johnston Chase
Globe Staff / March 23, 2011

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Another on-demand car company is rolling into Boston today, joining several other “car-sharing’’ services that are challenging the industry leader, Zipcar Inc., on its home turf.

Mint Cars On-Demand is providing vehicles in 11 neighborhoods, including the North End and Allston in Boston and near Harvard University and MIT in Cambridge. It calls itself a car-sharing service because, like its competitors, it rents vehicles by the hour as well as the day.

Mint faces plenty of competition, namely from Cambridge-based Zipcar, which controls an estimated three-quarters of the North American market. Others operating in the Boston area include iCar, Wheels to Go in Somerville, and RelayRides Inc., a San Francisco company that signs up people who make their own cars available.

But analysts say there’s room for more. Boston is a prime market because of its expensive, limited parking, a savvy customer base, and its many carless students.

Rising fuel costs are also leading many drivers to search for alternatives.

“Tough economics will typically drive membership,’’ said Mary-Beth Kellenberger, an analyst at Frost & Sullivan, a consulting firm.

In the United States, the industry is a $350 million one, with more than 500,000 members, according to Frost & Sullivan. Those numbers are expected to grow to 4 million members with revenue of nearly $3 billion by 2016.

Traditional rental companies have gotten into the act, too.

Hertz Corp. has cars in Boston and Quincy, U-Haul International Inc. offers car sharing in Worcester, and Enterprise Rent-A-Car plans to start such operations at Boston-area companies and universities in the fall.

Manufacturers are getting involved, too.

BMW Group just announced a car-sharing venture with a German rental car company, and Daimler AG rents smart fortwo cars in Germany and in Austin, Texas, under the name car2go.

It’s all part of a cultural shift toward on-demand car use, Kellenberger said.

In cities around the country, condominiums are being built with parking spaces designated for on-demand cars, corporations are signing up for by-the-hour services for their employees, and young, environmentally conscious customers are signing up in droves.

Katie Bryant, 24, of Roxbury, uses Zipcar at least once a week to run errands. She also drives a Zipcar supplied by her employer, a Cambridge nonprofit that helps find residences for homeless people.

“I think it’s a really good idea for people in cities because it can be expensive to have a car and find parking,’’ she said.

Despite the growing interest, the expense of buying and maintaining cars has prevented the industry from being a big moneymaker.

Zipcar, which has more than 550,000 members in the United States, Canada, and the United Kingdom, has not turned a profit since it started in 2000. Greater Boston Zipcar members complain about shortages of cars on the weekends, said John Attanucci, a transportation research associate at the Massachusetts Institute of Technology, which makes him skeptical of the business model.

“If they could really make money, you would think they could penetrate the market a little bit more,’’ he said, adding that it’s “a tough model because you have all these assets you essentially have to pay off before you can make any money.’’

Zipcar, which in June filed for a $75 million initial public offering of stock, declined to comment.

Like RelayRides, which arrived in Cambridge in June, Mint Cars is making its first foray into the national market in Boston. Mint Cars was started in 2008 by Richard Ull, 36, whose family is in the parking-lot business in New York City. It now has more than 100 cars in 40-plus locations in New York, including smart cars, Honda hybrids, and the Mercedes-Benz C300.

“As car sharing itself becomes less of a novelty and is sort of integrated more into the mainstream of bigger cities, there’s definitely room for a lot of players,’’ said Richard Mulligan, Mint Cars’ New England marketing director.

RelayRides founder Shelby Clark estimates that between 5 and 10 percent of licensed drivers in the Boston area have used on-demand cars.

The real competition, he said, is car ownership.

Globe correspondent Alli Knothe contributed to this report. Katie Johnston Chase can be reached at