What Has Gone So Awry at Zipcar – and the UK Vehicle-Sharing Market Dead?
The community kitchen in Rotherhithe has provided a large number of prepared dishes each week for two years to pensioners and vulnerable locals in south London. Yet, their operations have been thrown into disarray by the news that they will not have access to New Year’s Day.
The group had relied on Zipcar, the app-based vehicle rental service that allowed its cars via smartphone. It caused shock through the capital when it said it would shut down its UK business from 1 January.
This means many helpers cannot collect food from a major food charity, which gathers excess produce from grocery stores, cafes and restaurants. Obvious alternatives are further away, more expensive, or do not offer the same convenient access.
“The impact will be massively,” said Vimal Pandya, the project's founder. “Personally me and my team are concerned by the logistical challenge 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 Major Blow for Urban Car-Sharing
These volunteers are among over 500,000 people in London registered as 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 likely with Zipcar, which held a dominant position in the city.
The planned closure, subject to consultation with employees, is a serious setback to the vision that vehicle clubs in urban areas could reduce the need for private vehicle ownership. Yet, some experts have noted that Zipcar’s departure need not spell the end for the idea in Britain.
The Potential of Shared Mobility
Car sharing is prized by many urbanists and environmentalists as a way of mitigating the ills linked to vehicle ownership. Most cars sit idle on the side of the road for the vast majority 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 transit more. That helps urban areas – easing congestion and pollution – and boosts public health through more exercise.
What Went Wrong?
The company started in 2000 before being bought by the American rental giant Avis Budget in 2013. Zipcar’s UK income barely registered compared with its parent company's total earnings, and a loss that grew to £11.7m in 2024 gave no reason 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 streamline operations, enhance profitability”.
Zipcar’s most recent accounts said revenues had declined as drivers took less frequent, shorter trips. “These changes reflect the ongoing impact of the cost-of-living crisis, which continues to suppress demand for non-essential services,” it said.
London's Unique Hurdles
However, several experts noted that London has particular issues that made it difficult for the sector to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a mosaic of different procedures and prices that made it harder.
- Congestion Charge: The closure comes as electric cars becoming liable for 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 floating car club would pay over £1,100 annually, creating a significant barrier.
“Our fees should be one-twentieth of a resident’s permit,” 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 models for London to follow. Germany enacted national shared mobility laws in 2017, providing a nationwide framework for parking, support and exemptions. Now, the country has several 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, particularly on the continent, 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 already seriously considering entering the London market: “Operators will fill this gap.”
What Comes Next?
The company’s competitors can roughly be divided into two camps:
- 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 hire 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 P2P service, is already weighing up the UK gap. Rory Brimmer, its UK head, said there was a “big opportunity” to win more users. “A space exists that is going to need to be filled, because London still needs to move,” Brimmer said.
Yet, it could take some time for other players to build momentum. In the meantime, more people may feel forced to buy cars, and others across London will be left without access.
For Rotherhithe community kitchen, the next month will be a rush to find a solution. The delivery problem caused by Zipcar’s exit highlights the wider implications of its departure on community groups and the future of car-sharing in the UK.
