What Exactly Has Gone So Awry at Zipcar – Is the UK Vehicle-Sharing Sector Finished?
A community kitchen in Rotherhithe has been delivering a large number of cooked meals each week for the past two years to pensioners and needy locals in southeast London. However, the group's plans have been thrown into disarray by the announcement 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 customers to access its cars from the street. The company sent shockwaves across London when it said it would shut down its UK operations from 1 January.
This means many helpers cannot collect food from the Felix Project, that collects excess produce from supermarkets, cafes and restaurants. Other options are less convenient, costlier, or lack the same convenient access.
“It’s going to be affected massively,” said Vimal Pandya, the project's founder. “Personally me and my team are worried about the operational hurdle 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 Major Blow for Urban Car-Sharing
These volunteers are part of more than half a million people in London registered as car club members, who could be left without convenient access to vehicles, without the hassle and cost of ownership. The vast majority of those members were likely with Zipcar, which had a near-monopoly position in the city.
The planned closure, subject to consultation with employees, is a big blow to the vision that vehicle clubs in cities could reduce the need for private vehicle ownership. Yet, some analysts have noted that Zipcar’s departure need not mean the demise for the idea in Britain.
The Promise of Shared Mobility
Shared vehicle use is valued by many urbanists and environmentalists as a way of reducing the problems linked to vehicle ownership. Typically, vehicles sit idle on the street for the vast majority of the time, occupying parking. 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 – reducing congestion and pollution – and improves public health through more exercise.
What Went Wrong?
Zipcar was founded in 2000 before its acquisition 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.
Avis Budget has said the closure is part of a “wider restructuring across our global operations, where we are taking targeted actions to simplify processes, enhance profitability”.
Its latest financial reports said revenues had fallen as drivers took less frequent, shorter trips. “These changes reflect the ongoing impact of the economic squeeze, which continues to suppress demand for discretionary spending,” it said.
The Capital's Specific Challenges
Yet, industry observers noted that London has specific problems that made it difficult for the sector to succeed.
- Inconsistent Rules: With numerous local councils, car-club operators face a mosaic of different procedures and costs that made it harder.
- Congestion Charge: The closure coincides with electric cars start paying London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: Locals 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 private parking cost,” said Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”
A European Example
Other European countries offer models 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 trails at 0.7.
“What we see is that car sharing around the world, particularly on the continent, is growing,” said Bharath Devanathan of Invers.
He suggested authorities should start to treat car sharing as a form of public transport, and integrate it with train and bus stations. He added that a potential operator was already seriously considering entering the London market: “Operators will fill this gap.”
What Comes Next?
Other players 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.
- Peer-to-Peer Services: 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 P2P service, is already weighing up 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.
However, it could take some time for other players to build momentum. In the meantime, more people may choose to buy cars, and many across London will be without a convenient option.
For Rotherhithe community kitchen, the coming weeks will be a rush to find a way. The delivery problem caused by Zipcar’s exit highlights the wider implications of its departure on vital services and the prospects of car-sharing in the UK.
