What Exactly Has Gone Wrong at Zipcar – and the UK Vehicle-Sharing Sector Dead?
A community kitchen in Rotherhithe has provided a large number of cooked meals weekly for the past two years to pensioners and vulnerable locals in southeast London. Yet, the group's plans have been thrown into disarray by the announcement that they will not have access to New Year’s Day.
The group had relied on Zipcar, the car-sharing company that customers to access its fleet of vehicles via smartphone. It sent shockwaves through the capital when it declared it would shut down its UK business from 1 January.
This means many volunteers cannot pick up supplies from a major food charity, that collects surplus food from supermarkets, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or lack the same flexible hours.
“It’s going to be affected massively,” stated Vimal Pandya, the community kitchen’s founder. “My team and I are concerned by 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 among 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 members were likely with Zipcar, which held a dominant position in the city.
The planned closure, subject to consultation with employees, is a serious setback to hopes that car sharing in cities could reduce the need for private vehicle ownership. However, some analysts have noted that Zipcar’s exit need not spell the end for the idea in Britain.
The Potential of Car Sharing
Car sharing is valued by city planners and environmentalists as a way of reducing the problems associated with vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the side of the road for 95% of the time, occupying parking. They also involve large carbon emissions to produce, and people without a vehicle tend to walk, cycle and take public transport more. That helps urban areas – reducing congestion and pollution – and improves public health through increased activity.
Understanding the Decline
The company started in 2000 before being bought by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its parent company's overall annual revenue, and a loss 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. “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, several experts noted that London has particular issues that made it much harder for the company and its rivals to succeed.
- Patchwork Policies: Across 33 boroughs, car-club operators face a patchwork of different procedures and prices that complicate operations.
- Congestion Charge: The closure coincides with electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: Residents in some boroughs pay as little as £63 for a annual electric car parking permit. A floating car club would pay over £1,100 per year, creating a major disincentive.
“We should literally be charged one-twentieth of a resident’s permit,” said Robert Schopen of Co Wheels. “We’re taking cars off the street. We introduce cleaner models in their place.”
A European Example
Other European countries 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 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 shared mobility around the world, especially in Europe, is expanding,” said 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 already seriously considering entering the London market: “There will be fill this gap.”
The Future Landscape
Other players can be split into two models:
- Fleet Operators: 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 – 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.
However, it could take a while for other players to build momentum. In the meantime, more people may feel forced to buy cars, and many across London will be left without access.
For the volunteers in Rotherhithe, the next month will be a rush to find a way. The logistical challenge caused by Zipcar’s exit underscores the wider implications of its departure on community groups and the future of shared mobility in the UK.
