What Exactly Has Gone Wrong at Zipcar – Is the UK Car-Sharing Sector Finished?
The volunteer food project in Rotherhithe has distributed hundreds of cooked meals weekly for the past two years to pensioners and needy locals in southeast London. However, their operations face major disruption by the news that they will lose use of New Year’s Day.
The group had relied on Zipcar, the app-based vehicle rental service that customers to access its cars via smartphone. It sent shockwaves through the capital when it said it would shut down its UK operations from 1 January.
This means many volunteers will be unable to collect food from a major food charity, that collects excess produce from grocery stores, cafes and restaurants. Obvious alternatives are less convenient, costlier, or lack the same convenient access.
“The impact will be massively,” said Vimal Pandya, the project's founder. “My team and I are concerned by the operational hurdle we will face. Many groups like ours will face difficulties.”
“Knowing the reality, everyone is concerned and thinking: ‘How are we going to carry on?”
A Major Blow for Urban Car-Sharing
The community kitchen’s drivers are part of over 500,000 people in London who were car club members, now potentially left without easy use to vehicles, avoiding the burden and cost of ownership. The vast majority of those members were probably with Zipcar, which held a dominant position in the city.
This shutdown, pending consultation with staff, is a big blow to the vision that car sharing in cities could cut the need for private vehicle ownership. However, some analysts also suggested that Zipcar’s departure need not mean the demise for the concept in Britain.
The Potential of Shared Mobility
Car sharing is valued by city planners and environmentalists as a way of reducing the ills linked to vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the side of the road for 95% of the time, using up space. They also require large carbon emissions to produce, and people who do not own cars tend to walk, cycle and take transit more. That helps urban areas – reducing congestion and pollution – and boosts public 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 barely registered compared with its owner's overall annual revenue, and a deficit that grew to £11.7m in 2024 gave little incentive to continue.
The parent company stated the closure is part of a “broader transformation across our international business, where we are taking deliberate steps to simplify processes, improve returns”.
Its latest financial reports noted revenues had fallen as drivers took fewer and shorter trips. “These changes reflect the continuing effect of the cost-of-living crisis, which is dampening demand for discretionary spending,” it said.
London's Unique Hurdles
However, industry observers noted that London has particular issues 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 complicate operations.
- Congestion Charge: The closure comes as electric cars start paying London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: Residents in some boroughs pay just £63 for a year’s electric car parking permit. A floating car club would pay over £1,100 annually, creating a significant barrier.
“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.”
Lessons from Abroad
Other European countries offer examples for London to follow. Germany enacted national shared mobility laws in 2017, providing a unified system for parking, subsidies and waivers. Now, the country has 5.4 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 growing,” said Bharath Devanathan of Invers.
He suggested authorities should start to view vehicle clubs as a form of public transport, and integrate it with train and bus stations. He added that one unnamed client was looking at entering the London market: “There will be fill this gap.”
What Comes Next?
Other players can roughly be divided into two camps:
- Company-Owned Fleets: Which maintain their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Person-to-Person Rentals: Which allow users to rent out their own vehicles via an app – a kind of Airbnb for cars. Players include Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered peer-to-peer platform, is assessing the UK gap. Rory Brimmer, its UK managing director, 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.
Yet, it could take a while for other players to establish themselves. For now, more people may choose to buy cars, and others across London will be without a convenient option.
For the volunteers in Rotherhithe, the next month will be a rush to find a solution. The logistical challenge caused by Zipcar’s exit highlights the wider implications of its departure on community groups and the prospects of car-sharing in the UK.
