What Has Gone Wrong at Zipcar – Is the UK Car-Sharing Sector Dead?
The community kitchen in Rotherhithe has provided hundreds of prepared dishes weekly for two years to pensioners and vulnerable locals in south London. Yet, their operations face major disruption by the news that they will not have cars and vans on New Year’s Day.
The group depended on Zipcar, the app-based vehicle rental service that allowed its fleet of vehicles from the street. The company caused shock through the capital when it declared it would shut down its UK operations from 1 January.
It will mean many volunteers will be unable to collect food from the Felix Project, which gathers surplus food from supermarkets, 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 project's founder. “Personally me and my team are concerned by the operational hurdle we will face. A lot of people like ours are going to struggle.”
“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 part of over 500,000 people in London registered as car club members, now potentially left without convenient access to vehicles, without the hassle and cost of ownership. Most of those people were likely with Zipcar, which had a near-monopoly position in the city.
This shutdown, pending consultation with employees, is a serious setback to hopes that vehicle clubs in cities could reduce the need for owning a car. However, some experts have noted that Zipcar’s exit need not spell the end for the concept in Britain.
The Promise of Car Sharing
Car sharing is valued by city planners and green advocates as a way of mitigating the problems associated with vehicle ownership. Most cars sit idle on the side of the road for the vast majority of the time, using up space. They also involve large carbon emissions to produce, and people who do not own cars tend to use active travel and take transit more. That benefits cities – easing congestion and pollution – and boosts people’s health through increased activity.
Understanding the Decline
The company started in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its owner's total earnings, and a deficit that reached £11.7m in 2024 gave no reason to continue.
Avis Budget has said the closure is part of a “broader transformation across our global operations, where we are taking deliberate steps to streamline operations, improve returns”.
Its latest financial reports said revenues had declined as drivers took less frequent, shorter trips. “This trend reflect the continuing effect of the cost-of-living crisis, which continues to suppress demand for non-essential services,” it said.
The Capital's Specific Challenges
Yet, industry observers noted that London has particular issues that made it difficult for the sector to succeed.
- Patchwork Policies: Across 33 boroughs, car-club operators face a mosaic of different procedures and prices that complicate operations.
- New Costs: The closure comes as 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 annually, creating a major disincentive.
“Our fees should be one-twentieth of a private parking cost,” argued Robert Schopen of Co Wheels. “We’re taking cars off the street. We introduce cleaner models in their place.”
Lessons from Abroad
Nations in Europe offer examples for London to follow. Germany enacted national car-sharing legislation in 2017, providing a nationwide framework 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 shared mobility around the world, especially in Europe, is growing,” said Bharath Devanathan of Invers.
Devanathan said authorities should start to treat car sharing as a form of mass transit, and link 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.”
The Future Landscape
The company’s competitors can roughly be divided into two camps:
- Fleet Operators: Which maintain their own cars. Examples 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 – 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 head, said there was a “big opportunity” to win more users. “A space exists 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 build momentum. In the meantime, more people may feel forced to buy cars, and others across London will be left without access.
For the volunteers in Rotherhithe, the coming weeks will be a rush to find a way. The delivery problem caused by Zipcar’s exit underscores the wider implications of its departure on community groups and the future of shared mobility in the UK.
