Zipcar Acquires Local Motion, Continuing Business Ground Transportation Services Transformation

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Zipcar, the platform-based shared car rental company acquired by Avis for $500 million in 2013, announced earlier this month its acquisition of platform-based fleet management company Local Motion, for an undisclosed sum. Local Motion was founded in 2011 and has had 2 rounds of financing, including a $6 million series A Round from Andreessen Horowitz in 2013.

The Local Motion acquisition is yet another development signaling significant transformation in the business ground transportation segment, which should be of interest to business buyers focused on this category.

Local Motion distinguishes itself from traditional fleet management by its state-of-the-art technology and platform model that integrates a range of features, such as shared vehicles at any location versus some particular parking location, keyless and remote entry and enhanced vehicles and maintenance. Local Motion supports new vehicle access and fleet management capabilities, in effect being able to provide businesses with a “virtual” fleet. Local Motion can be and is used for both fleets of cars as well as fleets of trucks.

Zipcar has not specified a reason for acquiring Local Motion, but TechCrunch pointed out the deal will likely help Zipcar expand the enterprise side of its business and increase platform efficiencies. It is interesting to see that while traditional car rental company Avis first acquired platform-based, largely consumer-oriented Zipcar, it is now extending its reach to the enterprise with its acquisition of Local Motion.

Spend Matters has already been tracking and analyzing another instance of this transformation – namely the apparent success and implications of Uber for Business within enterprises over the past year.

Other recent news suggests that this transformation is roaring ahead, with automobile manufacturers entering the game. The Detroit News recently reported that car makers are increasingly deciding to add their own car sharing rental and ride sharing businesses instead of focusing solely on selling vehicles. According to the article, this is a widespread industry development, with companies like General Motors Co., Fiat Chrysler and Ford among the names looking into such projects. In addition, it is also noted that GM Venture, the car company’s investment arm, invested into the Internet and app-based ride-sharing platform Fline, for an undisclosed amount, back in July.

Clearly, all of these development indicate that the to-date relatively static buying category of ground transportation services is undergoing massive change, with impacts that will extend from travel and expense (T&E) to fleet management. Category managers should certainly be taking careful note, as the whole supplier landscape – and with it the whole long-standing procurement model – shifts radically.

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