Micro-analysis: SWOT

Strengths: Cool and modern brand image Unique technological platform A lot of experience in the industry (1) “Save-the-Earth” strategy Avis is already operating in Russia (2)	Weaknesses: No experience in emerging markets Low brand awareness in Russia
Opportunities:   Increasing environmental concerns Government support of eco-cars and development of infrastructure (3)  Partnerships with government and car plants (4)	Threats: Increasing rivalry and substitute services (car rent, taxi, public transport) Russian consumers are not familiar to car sharing No infrastructure High level of corruption and bureaucracy

Notes:

(1): Zipcar is a leading company in US. It enjoys first-mover advantage and therefore are well-aware of specifics and pitfalls in the car sharing industry. This experience might be helpful in expanding to another markets

(2): Avis is operating in Russia for more than five years, since Zipcar is its subsidiary that has no experience in emerging markets, it would be easier for Zipcar to enter Russian market with Avis’ experience

(3): From 2014, Russian government implement new legislation in order to support and promote the use of electro-cars. For instance, zero-tariff on the import of such cars and more facilities for service (charging and service stations). That might be crucial if Zipcar decides to continue its “green strategy” and will try to raise electro car culture in Russia.

(4): Since car sharing business requires of the company to own a wide-range car park, one of the possible solutions is partnerships with car assembly plants. Ford, General Motors and Nissan are successfully operating in Russia and might be considered as potential partners. Also, following from the previous point, Zipcar might be supported by government as a part of promoting electro-cars program.

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To sum up: Although today car sharing is not well-spread service among Russian people and many things should be overcame in order to build profitable relations with customers, there are a lot of opportunities for the industry here. Moreover, Zipcar has several strategical advantages that will help it to become successful in Russia.

Meso-analysis : Carsharing in Russia

Intensity of competitive rivalry: LOW

There is a mutual impact between car sharing activities and the car rental business. New business models are being introduced and, as traditional car rental companies continue to provide hourly rental services and car sharing options.

There are key international companies operating in the category of car rental (Table 1). However, despite the significant growth (car rental value sales grew by 14% in 2013) and the presence of international car rental brands, the category of car rental is considered to have not reached its full potential.

Table 1. Car Rental Brands by Key Performance Indicators, 2013

	Utilisation (%)	Fleet size (‘000cars)	Avg.# of Transactions Per Car	Avg. Rental Duration
Avis	91.8	0.2	83.7	4.0
Dollar Thrifty	53.2	0.6	46.3	4.2
Eleks-Polyus	34.3	0.3	29.8	4.2
Europcar	72.5	0.3	66.2	4.0
Hertz	69.2	1.5	56.1	4.5
Others	–	7.9	–	–
Sixt	78.7	0.6	59.8	4.8
Total	–	11.5	–	–

Source: Euromonitor International

In case of car sharing, there are only TWO officially registered companies, which operate on Russian market: Anytime  in Moscow and Streetcar in Saint-Petersburg.

Macro-level analysis of car-sharing industry in Russia

In order to assess the potential of car-sharing implementation in Russia we need to make a PESTEL analysis.

Political factors

–Governmental plans
There is a plan of traffic jams reduction by 2016. By 2016, the authorities intend to increase the average speed by 17% through a variety of measures (source – Financial Times).

–Taxes and duties
Russian government has introduced higher vehicle tax rates depending on the engine power and proposed to rduce this tax for electric cars. The import duty on eco-cars was removed.

–Subsidies
Regional subsidies for ecological projects.

Economic factors

There is a real income growth by 2.5%. Growth of real wages accelerated in February to 6% compared with 5.2% in January 2014, for the first two months, an increase of 5.6%. The unemployment rate remains approximately the same (5.4%).

Gasoline prices started to increase more for the recent time.

Annual increase of gas price

Social factors

–Environment
There are several ecological societies with successful propaganda of emission reduction (people start to care more about ecology).

–Car Usage Culture
According to Russian Public Opinion Research Center, 42% of Russian citizens drive a car. And this indicator continues to grow  by about 2-3% per year. However, in big cities, such as Moscow or St. Petersburg 44% don’t drive to work due to trafiic jams.  Moreover, there is still a trend among the population to drive their own car.

Technological factors

Growth of internet expansion

Allocation of IPv4 Address Space

Using the internet and social networking sites such as Facebook, Vkontakte are the hottest trends of
this decade.

– Progress of applications development

There is a significant increase of using mobile devices, such as iPhone and Android or Windows-based one. Thus, people have become to use different applications almost everyday, especially booking for plane, train or cinema tickets, hotel room etc.

– Infrastructure
Lack of parking places in major cities, which is a serious problem as well as traffic jams in big cities.

Environmental factors

There is a huge amount of emissions, which causes air pollution and bad ecological situations, especially in big cities. The following graph shows us that passenger vehicle emissions comprise two-thirds of that total. What is
more, vehicle emissions are one of the fastest growing sources of greenhouse gas emissions.

Sources of Emissions

 

Legal factors

There are environmental regulations – special standards for emissions and gas quality, governmental plans to cut the emissions. Moreover, every vehicle should have an obligatory regular technical examination.

In addition, there is a problem of bureacracy for doing such a business in Russia.

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To sum up the most important factors, which causes an opportunity for car sharing implementation in the Russian market are political, legal and environmental factors, which encourage eco-projects and technological development which helps to deal with customers easier. However, there are also obstacles, such as already existing lack of parking places and high importance of car ownership for people.

Prospects for internationalization: ZipCar in Russia

Mega trends like growing urbanization and changing mobility trends have triggered interest in both existing car owners and new buyers. As the place of business becomes concentrated around inner city centers, private car owners feel the pinch of escalating fuel prices, rising parking charges and negative subsidies in form of tolls and congestion charges. And even if they are ready to pay this all, they will still face the challenge of finding a parking space at all.

Frost & Sullivan Industry Analyst, V. Shankar

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Car-sharing services position themselves as offering an economical, convenient, and socially conscious alternative to car ownership (Forbes, 2014).

Zipcar, a membership-based car sharing company based in the US, is the pioneer in the car sharing industry.  Zipcar expanded into new markets using strategic mergers and acquisitions to become a global leader. Introduced first in Europe and later in North America, carsharing has demonstrated a rapid growth in the first years. However, according to MarketLine, in North America and European carsharing markets, the CAGR dropped from 64.0% and 26.0% respectively, in the 2006-2008 period, to 33.0% and 12.0% respectively, between 2010 and 2012. At the same time the Asian market increased with a CAGR of 40.0% in the 2010-2012 period, having previously contracted between 2006 and 2008. The fastest growth was witnessed in 2008-2010, with a CAGR of 155.0%. On the one hand, there are the clear signs of the maturity of the American and European markets, where Zipcar is currently operating. On the other hand, emerging economies market represents significant business opportunities.

Source: Berkley, 2013

In order to expand its customer base and gain a new market share, Zipcar may put under consideration entering the Russian market as increasingly crowed urban centers in major Russian cities have caused the emergence of concerns among consumers such as personal convenience and the environment. The need to address air pollution, congestion and lack of parking, coupled with the impact of the economic recession has triggered the search for alternative transportation modes. The potential of carsharing is seen in helping to create a more diversified and sustainable transport system, providing cost savings to those who adopt it in favor of vehicle ownership.

The surveyabout the role of car in everyday life  which was initiated by exchange students in fall 2013 and continued by the team in spring 2014 have unveiled some unteresting results (presented below, 100 respondents 2013/2014, Saint-Petersburg).

The results obtained are quire controversal. However the majority have stated that they need a car everyday and probably would like to try carsharing service.