What Exactly Has Gone Awry at Zipcar – Is the UK Vehicle-Sharing Market Finished?
The volunteer food project in Rotherhithe has distributed hundreds of cooked meals each week for the past two years to pensioners and needy locals in southeast London. Yet, their operations face major disruption by the announcement that they will lose access to New Year’s Day.
This organization had relied on Zipcar, the app-based vehicle rental service that allowed its fleet of vehicles via smartphone. The company sent shockwaves across London when it said it would cease its UK operations from 1 January.
It will mean many volunteers cannot collect food from the Felix Project, which gathers surplus food from supermarkets, cafes and restaurants. Obvious alternatives are further away, costlier, 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 worried about the logistical challenge we will face. Many groups like ours are going to struggle.”
“Knowing the reality, they are all worried and thinking: ‘How are we going to carry on?”
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, now potentially left without convenient access to vehicles, avoiding the burden and cost of ownership. Most of those people were likely with Zipcar, which had a near-monopoly position in the city.
This shutdown, subject to consultation with employees, is a serious setback to hopes that vehicle clubs in urban areas could reduce the need for owning a car. However, some experts also suggested that Zipcar’s exit need not spell the end for the idea in Britain.
The Potential of Car Sharing
Shared vehicle use is prized by many urbanists and green advocates as a way of reducing the ills linked to vehicle ownership. Most cars sit as two-tonne dead weights on the street for 95% of the time, using up space. They also involve large CO2 output to produce, and people without a vehicle tend to walk, cycle and take transit more. That benefits cities – easing congestion and pollution – and boosts public health through increased activity.
What Went Wrong?
Zipcar was founded in 2000 before its acquisition 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 little incentive to continue.
The parent company stated the closure is part of a “broader transformation across our global operations, where we are taking targeted actions to streamline operations, improve returns”.
Zipcar’s most recent accounts said 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.
The Capital's Specific Hurdles
However, industry observers noted that London has specific problems that made it difficult for the sector to succeed.
- Inconsistent Rules: 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.
- Parking Permit Disparity: Locals in some boroughs pay just £63 for a year’s electric car parking permit. A floating car club would pay over £1,100 annually, 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.”
A European Example
Other European countries offer examples for London to follow. Germany introduced national shared mobility laws in 2017, providing a nationwide framework 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 lags behind at 0.7.
“What we see is that shared mobility around the world, particularly on the continent, is expanding,” commented Bharath Devanathan of Invers.
Devanathan said authorities should start to treat car sharing as a form of mass transit, and link it with train and bus stations. He added that a potential operator was looking at entering the London market: “Operators will fill this gap.”
The Future Landscape
Other players can be split into two models:
- Company-Owned Fleets: Which maintain 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.
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 establish themselves. For now, 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 scramble 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.
