What Exactly Has Gone So Awry at Zipcar – Is the UK Vehicle-Sharing Market Dead?
A volunteer food project in Rotherhithe has distributed a large number of prepared dishes each week for two years to elderly residents and needy locals in southeast 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 depended on Zipcar, the car-sharing company that customers to access its fleet of vehicles via smartphone. It sent shockwaves through the capital when it declared it would shut down its UK business from 1 January.
It will mean many volunteers cannot pick up supplies from a major food charity, which gathers excess produce from supermarkets, cafes and restaurants. Obvious alternatives are further away, more expensive, or do not offer the same flexible hours.
“It’s going to be affected massively,” said Vimal Pandya, the community kitchen’s founder. “My team and I are worried about the logistical challenge we will face. A lot of people like ours will face difficulties.”
“Knowing the reality, they are all worried and thinking: ‘How are we going to carry on?”
A Significant Setback for Urban Car-Sharing
These volunteers are among more than half a million people in London who were car club members, who could be left without convenient access to vehicles, without the hassle and cost of ownership. The vast majority of those people were likely with Zipcar, which held a dominant position in the city.
This shutdown, subject to consultation with staff, is a serious setback to the vision that vehicle clubs in urban areas could cut the need for owning a car. However, some analysts have noted that Zipcar’s exit need not spell the end for the idea in Britain.
The Potential of Shared Mobility
Car sharing is valued by city planners and green advocates as a way of reducing the problems associated with vehicle ownership. Most cars sit as two-tonne dead weights on the street for the vast majority of the time, using up space. They also involve large CO2 output to produce, and people who do not own cars tend to use active travel and take transit more. That benefits cities – reducing congestion and pollution – and boosts public health through increased activity.
Understanding the Decline
The company started in 2000 before its acquisition 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 deficit that reached £11.7m in 2024 gave little incentive to continue.
The parent company stated the closure is part of a “wider restructuring across our global operations, where we are taking targeted actions to streamline operations, improve returns”.
Its latest financial reports said revenues had fallen as drivers took fewer and shorter trips. “This trend reflect the continuing effect of the economic squeeze, which continues to suppress demand for non-essential services,” it said.
London's Unique Challenges
However, industry observers noted that London has particular issues that made it much harder for the company and its rivals to succeed.
- Inconsistent Rules: With numerous local councils, car-club operators face a mosaic of different procedures and costs that made it harder.
- Congestion Charge: The closure comes as electric cars start paying London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: Locals in some boroughs pay just £63 for a annual electric car parking permit. A floating car club would pay over £1,100 annually, creating a major disincentive.
“Our fees should be one-twentieth of a private parking cost,” argued Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”
A European Example
Other European countries offer models for London to follow. Germany enacted national car-sharing legislation in 2017, providing a unified system for parking, subsidies and waivers. 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,” said 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 already seriously considering entering the London market: “There will be fill this gap.”
The Future Landscape
The company’s competitors can roughly be divided into two camps:
- Fleet Operators: Which maintain their own cars. This includes 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 – a kind of Airbnb for cars. Players include 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. “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 establish themselves. In the meantime, more people may choose 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 logistical challenge caused by Zipcar’s exit highlights the broader impact of its departure on community groups and the future of car-sharing in the UK.