What Exactly Has Gone So Awry at Zipcar – Is the UK Car-Sharing Sector Finished?
The community kitchen in Rotherhithe has distributed hundreds of cooked meals each week for two years to elderly residents and needy locals in southeast London. Yet, the group's plans have been thrown into disarray by the announcement that they will lose cars and vans on New Year’s Day.
This organization had relied 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 business from 1 January.
This means many helpers will be unable to pick up supplies from the Felix Project, which gathers excess produce from supermarkets, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or do not offer the same flexible hours.
“It’s going to be affected massively,” stated Vimal Pandya, the project's founder. “My team and I are concerned by the logistical challenge we will face. Many groups like ours will face difficulties.”
“Knowing the reality, everyone is concerned and thinking: ‘How are we going to carry on?”
A Significant Setback for Urban Car-Sharing
The community kitchen’s drivers are part of more than half a million people in London who were car club members, who could be left without easy use to vehicles, avoiding the burden 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 staff, is a serious setback to the vision that car sharing in urban areas could reduce the need for owning a car. Yet, some analysts also suggested that Zipcar’s exit need not spell the end for the idea in Britain.
The Potential of Shared Mobility
Shared vehicle use is prized by city planners and green advocates as a way of mitigating the problems associated with 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 benefits cities – easing congestion and pollution – and boosts public health through increased activity.
What Went Wrong?
The company started in 2000 before being bought by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its owner's total earnings, 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”.
Its latest financial reports noted revenues had declined as drivers took less frequent, shorter trips. “This trend reflect the ongoing impact of the cost-of-living crisis, which continues to suppress demand for discretionary spending,” it said.
The Capital's Specific Challenges
Yet, industry observers noted that London has specific problems that made it much harder for the sector to succeed.
- Patchwork Policies: 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 as little as £63 for a annual electric car parking permit. A similar shared vehicle would pay over £1,100 per year, creating a major disincentive.
“Our fees should be one-twentieth of a private parking cost,” said Robert Schopen of Co Wheels. “We’re taking cars off the street. We introduce cleaner models in their place.”
Lessons from Abroad
Other European countries offer models for London to follow. Germany introduced national car-sharing legislation in 2017, providing a unified system 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 trails at 0.7.
“What we see is that shared mobility around the world, particularly on the continent, is growing,” commented Bharath Devanathan of Invers.
He suggested 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 already seriously considering entering the London market: “Operators will fill this gap.”
The Future Landscape
Other players can roughly be divided into two models:
- Fleet Operators: 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.
Turo, a US-headquartered peer-to-peer platform, is assessing the UK gap. Rory Brimmer, its UK managing director, 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 some time for other players to establish themselves. For now, more people may feel forced to buy cars, and others across London will be without a convenient option.
For the volunteers in Rotherhithe, the coming weeks will be a rush to find a way. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on vital services and the future of car-sharing in the UK.
