Zipcar’s brand is set to unite two national car sharing companies.

Car sharing made headlines in late October when Flexcar and Zipcar, the country’s two largest car sharing rivals, announced they would merge their fleets, branding and operations.

While the companies did not release the financial details of the merger, they announced the new company would adopt the Zipcar brand and maintain headquarters in Cambridge, with Zipcar CEO Scott Griffith at the helm. Mark Norman, CEO of Seattle-based Flexcar, was named chief operating officer of the new car sharing goliath. Flexcar plans to adopt the Zipcar brand by spring 2008, says Flexcar spokesperson John Williams.

Rising fuel costs and consumer awareness of climate issues have helped boost the car sharing industry in recent years. Companies charge members a fee, which gives them access to a fleet of vehicles. Insurance, gas and maintenance costs are all included in hourly or daily rental fees. Zipcar and Flexcar, both founded in 1999, received significant investments in 2005. Venture capitalist and eBay director Robert Kagle invested $10 million in ZipCar in July 2005, just one month before Revolution Living, owned by AOL co-founder Steve Case, increased his stake in Flexcar from 55percent to 85 percent [see “AOL’s Steve Case invests in Flexcar,” SI, October 2005]. Today, Zipcar boasts more than 120,000 members and 3,500 vehicles in 35 cities, including Vancouver, B.C.; Toronto; and London.

Flexcar says it has 50,000 members and 1,500 cars in 15cities, which are concentrated on the West Coast. In 2006, both companies set up shop in the Bay Area, the only West Coast city where they compete head-to-head for members. They split the streets with City CarShare, a nonprofit car-sharing organization founded in 2001that has 15,000members and more than 230 cars, according to Anita Daley, City CarShare’s director of membership development and outreach. City CarShare is one of more than 30 independent U.S. car sharing companies. Daley says that private car sharing companies have helped the industry overall by increasing awareness among consumers, but they have also led to increased competition, and thus cost, for parking spots. Private competitors have also decreased City CarShare’s clout with grantmakers, she notes.

Adam Millard-Ball, a consultant with San Francisco–based Nelson\Nygaard Consulting Associates who has studied the car sharing industry for five years, says there is room in the industry for both business models. “Nonprofits like City CarShare, which are driven more by an environmental mission, can keep their for-profit competitors on their toes,” he says.

Each car sharing vehicle reduces the need for six to 23 cars in North America and four to 10 privately owned cars in continental Europe, according to a report by Susan Shaheen and Adam Cohen of the University of California at Berkeley.