What Has Gone So Awry at Zipcar – Is the UK Car-Sharing Market Finished?
A volunteer food project in Rotherhithe has been delivering a large number of cooked meals each week for two years to pensioners and vulnerable locals in southeast London. Yet, the group's plans face major disruption by the announcement that they will lose cars and vans on New Year’s Day.
The group had relied on Zipcar, the app-based vehicle rental service that customers to access its cars via smartphone. The company caused shock through the capital when it said it would cease its UK operations from 1 January.
This means many volunteers cannot collect food from the Felix Project, which gathers excess produce from grocery stores, cafes and restaurants. Obvious alternatives are further away, costlier, or lack the same flexible hours.
“It’s going to be affected massively,” stated Vimal Pandya, the community kitchen’s founder. “Personally me and my team are concerned by the logistical challenge we will face. Many groups like ours will face difficulties.”
“Knowing the reality, they are all worried and thinking: ‘How are we going to carry on?”
A Significant Setback for City Vehicle Clubs
These volunteers are among more than half a million people in London who were car club members, who could be left without convenient access to vehicles, without the hassle and cost of ownership. Most of those people were probably with Zipcar, which held a dominant position in the city.
The planned closure, subject to consultation with employees, is a serious setback to the vision that car sharing in cities could reduce the need for private vehicle ownership. However, some experts also suggested that Zipcar’s departure need not mean the demise for the concept in Britain.
The Promise of Shared Mobility
Shared vehicle use is valued by city planners and environmentalists as a way of reducing the ills associated with vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the side of the road for the vast majority of the time, using up space. They also require large carbon emissions to produce, and people without a vehicle tend to use active travel and take transit more. That helps urban areas – reducing congestion and pollution – and improves people’s health through more exercise.
What Went Wrong?
Zipcar was founded in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK income were minimal compared with its parent company's overall annual revenue, and a deficit that grew to £11.7m in 2024 gave no reason to continue.
The parent company stated the closure is part of a “wider restructuring across our global operations, where we are taking deliberate steps to streamline operations, enhance profitability”.
Its latest financial reports said revenues had declined as drivers took fewer and shorter trips. “This trend reflect the continuing effect of the economic squeeze, which is dampening demand for discretionary spending,” it said.
London's Unique Challenges
Yet, industry observers noted that London has specific problems that made it much harder for the company and its rivals to succeed.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a patchwork of different procedures and prices that made it harder.
- Congestion Charge: The closure coincides with electric cars start paying London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: Residents in some boroughs pay just £63 for a year’s electric car parking permit. A similar shared vehicle would pay over £1,100 per year, creating a major disincentive.
“Our fees should be one-twentieth of a resident’s permit,” argued Robert Schopen of Co Wheels. “We’re taking cars off the street. We’re putting less polluting cars in their place.”
A European Example
Other European countries offer examples for London to follow. Germany introduced national shared mobility laws in 2017, providing a nationwide framework for parking, support and waivers. Now, the country has several shared cars per 10,000 people, while France has 2.1 and Belgium has 6.3. The UK lags behind at 0.7.
“The evidence shows is that car sharing around the world, particularly on the continent, is expanding,” commented Bharath Devanathan of Invers.
Devanathan said authorities should start to treat car sharing as a form of public transport, and link it with train and bus stations. He added that a potential operator was looking at entering the London market: “Operators will fill this gap.”
What Comes Next?
The company’s competitors can roughly be divided into two models:
- Company-Owned Fleets: Which own or lease their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Person-to-Person Rentals: Which allow users to hire out their own vehicles via an app – similar to Airbnb for cars. Players include Britain’s Hiyacar and the US’s Getaround and Turo.
Turo, a US-headquartered P2P service, is assessing the UK gap. Rory Brimmer, its UK head, said there was a “big opportunity” to win more users. “There is a void that is going to need to be filled, because London still needs to move,” Brimmer said.
However, it could take some time for other players to establish themselves. For now, more people may feel forced to buy cars, and others across London will be left without access.
For Rotherhithe community kitchen, the next month will be a rush to find a way. The delivery problem caused by Zipcar’s exit underscores the wider implications of its departure on vital services and the prospects of shared mobility in the UK.
