What 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 pensioners and vulnerable locals in south London. Yet, their operations face major disruption 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 cars via smartphone. It sent shockwaves across London when it said 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 surplus food from grocery stores, cafes and restaurants. Obvious alternatives are less convenient, costlier, or lack the same flexible hours.
“It’s going to be affected massively,” said Vimal Pandya, the project's founder. “Personally me and my team are worried about the logistical challenge we will face. A lot of people like ours will face difficulties.”
“Faced with this reality, everyone is concerned and thinking: ‘How will we continue?’”
A Significant Setback for Urban Car-Sharing
These volunteers are part of 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 probably with Zipcar, which had a near-monopoly position in the city.
The planned closure, pending consultation with employees, is a serious setback to the vision that car sharing in urban areas could reduce the need for owning a car. However, some analysts also suggested that Zipcar’s exit need not mean the demise for the idea in Britain.
The Promise of Car Sharing
Shared vehicle use is prized by city planners and environmentalists as a way of mitigating the ills associated with vehicle ownership. Most cars sit idle on the side of the road for 95% of the time, using up space. They also involve 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 improves people’s health through increased activity.
What Went Wrong?
Zipcar was founded in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK income 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.
The parent company stated the closure is part of a “broader transformation across our international business, where we are taking targeted actions to simplify processes, improve returns”.
Its latest financial reports said revenues had fallen as drivers took fewer and shorter trips. “These changes reflect the continuing effect of the cost-of-living crisis, which continues to suppress demand for non-essential services,” it said.
London's Unique Hurdles
Yet, several experts noted that London has particular issues that made it difficult for the company and its rivals to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a mosaic of varying processes and costs that complicate operations.
- New Costs: The closure coincides with electric cars start paying London’s congestion charge, adding extra expenses.
- Unequal Parking Fees: Locals in some boroughs pay just £63 for a annual 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 resident’s permit,” said Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”
Lessons from Abroad
Other European countries offer examples for London to follow. Germany enacted national shared mobility laws in 2017, providing a unified system for parking, support 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 lags behind at 0.7.
“The evidence shows is that car sharing around the world, especially in Europe, is expanding,” commented Bharath Devanathan of Invers.
Devanathan said 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: “Operators will fill this gap.”
What Comes Next?
The company’s competitors can roughly be divided into two models:
- Company-Owned Fleets: Which own or lease 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 – similar to 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 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.
Yet, it could take a while for other players to build momentum. For now, more people may feel forced to buy cars, and others across London will be left without access.
For Rotherhithe community kitchen, the coming weeks will be a rush to find a solution. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on vital services and the prospects of car-sharing in the UK.
