City Car Club membership soared 90 per cent during the past year to 3,500, forcing it to increase its fleet of vehicles from 85 to more than 100.
The club allows people to rent cars on an hourly basis, thus reducing the problems of parking – the scheme has specially designated spaces across the city – and the running costs associated with car ownership.
Paul Tetlaw, chairman of Transform Scotland, the national sustainable transport alliance which has been researching the possibilities of extending the service into other cities, said: "The success of the Edinburgh City Car Club shows that there is a real appetite for alternatives to car ownership and we are delighted it continues to go from strength to strength.
"Not only do car clubs provide a real choice for people when deciding how to make a journey, they also reduce congestion, reduce climate change emissions and provide real economic savings."
Tom Rye, professor of Transport policy at Napier University's Transport Research Institute, said that the car club had reached a "critical mass" that fuelled its own expansion.
"The City Car Club has expanded to the point where the public has a much greater awareness of it, and that essentially is now driving growth.
"It is now in high-density, high-visibility areas of the city."
He said that there was no evidence that the global financial downturn had anything to do with pushing people towards jettisoning their own cars, but added such clubs were appealing to certain types of car owners – those who have second cars or are low-mileage users – as an alternative option.
Prof Rye added that their research showed this shift had a knock-on effect on congestion.
"They are certainly beneficial in terms of congestion," he said.
When people move into a car club from having owned a car privately, their use of it massively reduces – where before they might have used it for two-thirds of their journeys, it drops to just a quarter.
"By hiring on an hourly basis, people become more aware of how they use it and it becomes more akin to using a bus."
The success of Edinburgh's scheme has resulted in a similar one being set up in Glasgow.
Similar ventures have become highly popular in northern Europe, while across America schemes such as Zipcar – the world's largest car sharing scheme – are becoming common sights.
James Finlayson, managing director of City Car Club, said: "Demand and uptake of our car club service in Edinburgh is at an all-time high, so these new cars and locations will make the service even more accessible to both residents and businesses across the city. It won't be long before Edinburgh has its 100th car club car."