What Has Gone Wrong at Zipcar – Is the UK Vehicle-Sharing Market Finished?
A community kitchen in Rotherhithe has distributed hundreds of cooked meals each week for two years to elderly residents and vulnerable locals in south London. However, the group's plans have been thrown into disarray by the news that they will not have use of 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. It caused shock through the capital when it declared it would cease its UK operations from 1 January.
This means many volunteers will be unable to pick up supplies from the Felix Project, that collects excess produce from grocery stores, cafes and restaurants. Other options are further away, more expensive, or lack the same flexible hours.
“The impact will be massively,” said Vimal Pandya, the project's founder. “My team and I are concerned by the logistical challenge we will face. A lot of people like ours are going to struggle.”
“Knowing the reality, they are all worried and thinking: ‘How will we continue?’”
A Significant Setback for Urban Car-Sharing
The community kitchen’s drivers 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 people were likely with Zipcar, which held a dominant position in the city.
This shutdown, pending consultation with staff, is a big blow to hopes that vehicle clubs in urban areas could cut the need for private vehicle ownership. Yet, some analysts also suggested that Zipcar’s exit need not mean the demise for the concept in Britain.
The Promise of Car Sharing
Car sharing is valued by city planners and environmentalists as a way of mitigating the problems linked to vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the street for 95% of the time, using up space. They also require large CO2 output to produce, and people without a vehicle tend to use active travel and take transit more. That helps urban areas – reducing congestion and pollution – and improves public health through more exercise.
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 parent company's overall annual revenue, and a loss that reached £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”.
Zipcar’s most recent accounts noted revenues had declined as drivers took less frequent, shorter trips. “These changes reflect the ongoing impact of the economic squeeze, which is dampening demand for discretionary spending,” it said.
London's Unique Challenges
Yet, several experts noted that London has specific problems that made it much harder for the company and its rivals to succeed.
- Inconsistent Rules: With numerous local councils, car-club operators face a mosaic of different procedures and prices that complicate operations.
- New Costs: The closure coincides with electric cars start paying London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: Locals in some boroughs pay as little as £63 for a year’s electric car parking permit. A floating car club would pay over £1,100 annually, 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’re putting less polluting cars in their place.”
A European Example
Nations in Europe offer models for London to follow. Germany enacted national shared mobility laws in 2017, providing a nationwide framework for parking, subsidies and exemptions. 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, particularly on the continent, is expanding,” 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 a potential operator was looking at entering the London market: “There will be fill this gap.”
What Comes Next?
Other players can be split into two camps:
- Fleet Operators: Which maintain their own cars. This includes 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.
Turo, a US-headquartered peer-to-peer platform, is assessing the UK gap. Rory Brimmer, its UK head, said there was a “significant chance” 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 a while for other players to build momentum. For now, more people may feel forced to buy cars, and many across London will be without a convenient option.
For Rotherhithe community kitchen, the next month will be a rush to find a way. The logistical challenge caused by Zipcar’s exit underscores the broader impact of its departure on community groups and the prospects of car-sharing in the UK.
