What Exactly Has Gone Wrong at Zipcar – Is the UK Car-Sharing Market Finished?
The community kitchen in Rotherhithe has been delivering a large number of cooked meals each week for the past two years to elderly residents and vulnerable locals in southeast London. However, the group's plans face major disruption by the announcement that they will lose cars and vans on New Year’s Day.
This organization had relied on Zipcar, the car-sharing company that allowed its cars via smartphone. It caused shock across London when it declared it would shut down its UK operations from 1 January.
It will mean many helpers will be unable to pick up supplies from the Felix Project, that collects surplus food from supermarkets, cafes and restaurants. Obvious alternatives are further away, more expensive, or do not offer the same convenient access.
“The impact will be massively,” stated Vimal Pandya, the community kitchen’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 will we continue?’”
A Significant Setback for City Vehicle Clubs
These volunteers are among more than half a million 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 members were probably with Zipcar, which held a dominant position in the city.
This shutdown, pending consultation with staff, is a serious setback to hopes that vehicle clubs in urban areas could reduce the need for private vehicle ownership. Yet, some experts 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 mitigating the ills 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 public transport more. That helps urban areas – easing congestion and pollution – and improves public health through more exercise.
What Went Wrong?
Zipcar was founded in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK income were minimal compared with its owner's total earnings, and a deficit that reached £11.7m in 2024 gave little incentive to continue.
Avis Budget has said the closure is part of a “broader transformation across our international business, where we are taking targeted actions to simplify processes, 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 economic squeeze, which is dampening demand for non-essential services,” it said.
London's Unique Challenges
However, several experts noted that London has specific problems that made it much harder for the company and its rivals to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a mosaic of varying processes and prices that made it harder.
- Congestion Charge: The closure coincides with electric cars start paying London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: Residents in some boroughs pay just £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 resident’s permit,” argued 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 unified system for parking, subsidies 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 trails 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 link it with train and bus stations. He added that one unnamed client was looking at entering the London market: “There will be fill this gap.”
The Future Landscape
The company’s competitors can be split into two camps:
- Company-Owned Fleets: 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.
One company, a US-headquartered P2P service, is already weighing up the UK gap. Rory Brimmer, its UK managing director, 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.
However, it could take some time for other players to establish themselves. For now, 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 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 shared mobility in the UK.
