What Exactly Has Gone So Wrong at Zipcar – Is the UK Car-Sharing Sector Finished?
A volunteer food project in Rotherhithe has been delivering a large number of cooked meals each week for two years to elderly residents and vulnerable locals in south London. However, the group's plans face major disruption by the announcement that they will lose use of New Year’s Day.
The group depended on Zipcar, the app-based vehicle rental service that customers to access its cars from the street. The company caused shock across London when it declared it would cease its UK operations from 1 January.
It will mean many volunteers will be unable to collect food from the Felix Project, that collects excess produce from supermarkets, cafes and restaurants. Obvious alternatives are further away, more expensive, or do not offer the same convenient access.
“It’s going to be affected massively,” stated Vimal Pandya, the project's founder. “Personally me and my team are concerned by the logistical challenge we will face. A lot of people like ours will face difficulties.”
“Knowing the reality, they are all worried and thinking: ‘How will we continue?’”
A Significant Setback for City Vehicle Clubs
These volunteers are part of over 500,000 people in London who were car club members, who could be left without convenient access to vehicles, without the hassle and cost of ownership. The vast majority of those people were probably with Zipcar, which held a dominant position in the city.
This shutdown, pending consultation with employees, is a serious setback to hopes that car sharing in urban areas could cut the need for private vehicle ownership. Yet, some experts also suggested that Zipcar’s exit need not mean the demise for the idea in Britain.
The Potential of Car Sharing
Car sharing is valued by many urbanists and green advocates as a way of reducing the ills linked to vehicle ownership. Most cars 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 who do not own cars tend to walk, cycle and take public transport more. That helps urban areas – easing congestion and pollution – and boosts public health through increased activity.
What Went Wrong?
The company started in 2000 before being bought by the American rental giant Avis Budget in 2013. Zipcar’s UK income barely registered compared with its parent company's total earnings, and a deficit that reached £11.7m in 2024 gave little incentive to continue.
The parent company stated the closure is part of a “broader transformation across our global operations, where we are taking deliberate steps to simplify processes, improve returns”.
Its latest financial reports noted revenues had declined as drivers took fewer and shorter trips. “This trend reflect the continuing effect of the cost-of-living crisis, which is dampening demand for discretionary spending,” it said.
The Capital's Specific Challenges
Yet, industry observers noted that London has particular issues that made it difficult for the company and its rivals to succeed.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a mosaic of varying processes and costs that made it harder.
- New Costs: The closure comes as electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: Residents in some boroughs pay just £63 for a annual electric car parking permit. A floating car club would pay over £1,100 per year, creating a major disincentive.
“Our fees should be one-twentieth of a resident’s permit,” said Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”
A European Example
Nations in Europe offer models for London to follow. Germany introduced national car-sharing legislation in 2017, providing a unified system 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.
“What we see is that shared mobility around the world, particularly on the continent, is growing,” commented Bharath Devanathan of Invers.
He suggested authorities should start to view vehicle clubs as a form of mass transit, 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.”
The Future Landscape
The company’s competitors can roughly be divided into two camps:
- Company-Owned Fleets: Which own or lease their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Peer-to-Peer Services: Which allow users to hire out their own vehicles via an app – a kind of Airbnb for cars. Examples Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered peer-to-peer platform, is already weighing up the UK gap. Rory Brimmer, its UK managing director, said there was a “significant chance” 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 a while for other players to establish themselves. In the meantime, more people may choose to buy cars, and others across London will be without a convenient option.
For Rotherhithe community kitchen, the next month will be a scramble to find a way. The logistical challenge caused by Zipcar’s exit underscores the wider implications of its departure on community groups and the prospects of car-sharing in the UK.