What Has Gone Wrong at Zipcar – and the UK Car-Sharing Market Dead?
The volunteer food project in Rotherhithe has provided hundreds of prepared dishes each week for two years to elderly residents and vulnerable locals in south London. Yet, the group's plans face major disruption by the announcement that they will not have access to New Year’s Day.
The group depended on Zipcar, the app-based vehicle rental service that customers to access its fleet of vehicles from the street. The company sent shockwaves across London 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 a major food charity, that collects surplus food from supermarkets, cafes and restaurants. Other options are further away, more expensive, or do not offer the same convenient access.
“It’s going to be affected massively,” said Vimal Pandya, the community kitchen’s founder. “Personally me and my team are concerned by the operational hurdle we will face. Many groups like ours will face difficulties.”
“Faced with this reality, they are all worried and thinking: ‘How are we going to carry on?”
A Significant Setback for City Vehicle Clubs
The community kitchen’s drivers are among over 500,000 people in London who were car club members, now potentially left without easy use to vehicles, without the hassle and cost of ownership. The vast majority of those people were likely with Zipcar, which held a dominant position in the city.
The planned closure, subject to consultation with staff, is a serious setback to the vision that car sharing in cities could reduce the need for private vehicle ownership. However, some analysts have noted that Zipcar’s departure need not mean the demise for the concept in Britain.
The Promise of Car Sharing
Shared vehicle use is prized by many urbanists and green advocates 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 CO2 output to produce, and people who do not own cars tend to use active travel and take public transport more. That benefits cities – reducing congestion and pollution – and improves public health through increased activity.
What Went Wrong?
The company started in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its parent company's overall annual revenue, and a loss 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 targeted actions to streamline operations, enhance profitability”.
Zipcar’s most recent accounts noted revenues had fallen as drivers took fewer and shorter trips. “This trend reflect the ongoing impact of the economic squeeze, which continues to suppress demand for non-essential services,” it said.
London's Unique Hurdles
Yet, several experts noted that London has specific problems that made it much harder for the sector to succeed.
- Inconsistent Rules: With numerous local councils, car-club operators face a mosaic of varying processes and prices that made it harder.
- New Costs: The closure comes as electric cars start paying London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: 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 significant barrier.
“We should literally be charged one-twentieth of a private parking cost,” said 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 models for London to follow. Germany enacted 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.
“The evidence shows is that shared mobility around the world, particularly on the continent, is growing,” commented Bharath Devanathan of Invers.
Devanathan said authorities should start to view vehicle clubs as a form of public transport, and link it with train and bus stations. He added that one unnamed client was looking at entering the London market: “Operators will fill this gap.”
What Comes Next?
The company’s competitors can be split into two camps:
- Company-Owned Fleets: Which own or lease their own cars. Examples 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.
Turo, a US-headquartered P2P service, is already weighing up the UK gap. Rory Brimmer, its UK head, 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. For now, more people may choose to buy cars, and many across London will be left without access.
For the volunteers in Rotherhithe, the coming weeks will be a scramble 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.
