What Exactly Has Gone Wrong at Zipcar – Is the UK Car-Sharing Sector Finished?
A volunteer food project in Rotherhithe has been delivering a large number of prepared dishes each week for the past two years to pensioners and needy locals in south London. Yet, the group's plans face major disruption by the news that they will lose cars and vans on New Year’s Day.
The group had relied on Zipcar, the car-sharing company that customers to access its cars from the street. It caused shock across London when it declared it would cease its UK operations from 1 January.
It will mean many volunteers cannot pick up supplies from a major food charity, which gathers surplus food from supermarkets, cafes and restaurants. Other options are less convenient, costlier, or lack the same convenient access.
“It’s going to be affected massively,” stated Vimal Pandya, the project's founder. “My team and I are worried about the operational hurdle we will face. Many groups like ours are going to struggle.”
“Knowing the reality, they are all worried and thinking: ‘How will we continue?’”
A Significant Setback for City Vehicle Clubs
The community kitchen’s drivers are among over 500,000 people in London who were car club members, who could be left without easy use 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.
The planned closure, subject to consultation with staff, is a big blow to hopes 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 mean the demise for the idea in Britain.
The Potential of Shared Mobility
Car sharing is valued by city planners and environmentalists as a way of reducing the ills linked to vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the side of the road for 95% of the time, using up space. They also involve large carbon emissions to produce, and people without a vehicle tend to walk, cycle and take public transport more. That helps urban areas – reducing congestion and pollution – and boosts people’s health through increased activity.
Understanding the Decline
Zipcar was founded in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its parent company's overall annual revenue, and a loss that grew to £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 simplify processes, improve returns”.
Zipcar’s most recent accounts said revenues had fallen as drivers took fewer and shorter trips. “These changes reflect the continuing effect of the cost-of-living crisis, which is dampening demand for discretionary spending,” it said.
London's Unique Challenges
However, industry observers noted that London has specific problems that made it difficult for the sector to succeed.
- Patchwork Policies: Across 33 boroughs, car-club operators face a patchwork of different procedures and prices that complicate operations.
- New Costs: The closure comes as electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: Residents in some boroughs pay just £63 for a annual electric car parking permit. A floating car club 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.”
A European Example
Other European countries offer examples for London to follow. Germany introduced national shared mobility laws in 2017, providing a unified system for parking, support 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 car sharing around the world, particularly on the continent, is growing,” said Bharath Devanathan of Invers.
He suggested authorities should start to view vehicle clubs 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.”
What Comes Next?
Other players can roughly be divided into two camps:
- Fleet Operators: Which own or lease their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Peer-to-Peer Services: Which allow users to hire out their own vehicles via an app – a kind of Airbnb for cars. Examples Britain’s Hiyacar and the US’s Getaround and Turo.
Turo, a US-headquartered P2P service, is already weighing up 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.
Yet, it could take a while for other players to establish themselves. In the meantime, more people may choose to buy cars, and many across London will be left without access.
For Rotherhithe community kitchen, the next month will be a scramble to find a solution. The delivery problem caused by Zipcar’s exit highlights the wider implications of its departure on vital services and the prospects of car-sharing in the UK.
