What Has Gone So Awry at Zipcar – and the UK Car-Sharing Market Finished?
A volunteer food project in Rotherhithe has provided a large number of cooked meals weekly for the past two years to pensioners and vulnerable locals in south 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 depended on Zipcar, the app-based vehicle rental service that allowed its fleet of vehicles via smartphone. The company sent shockwaves across London when it declared it would cease its UK operations from 1 January.
It will mean many volunteers will be unable to collect food from the Felix Project, that collects surplus food from supermarkets, cafes and restaurants. Other options are less convenient, more expensive, or lack the same flexible hours.
“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. A lot of people like ours are going to struggle.”
“Faced with this reality, they are all worried and thinking: ‘How are we going to carry on?”
A Major Blow for City Vehicle Clubs
The community kitchen’s drivers are among over 500,000 people in London registered as car club members, now potentially left without easy use to vehicles, avoiding the burden and cost of ownership. The vast majority of those members were likely with Zipcar, which had a near-monopoly position in the city.
This shutdown, subject to consultation with employees, is a serious setback to hopes that car sharing in urban areas could cut the need for owning a car. However, some analysts also suggested that Zipcar’s exit need not mean the demise for the idea in Britain.
The Promise of Car Sharing
Car sharing is valued by many urbanists and environmentalists as a way of mitigating the problems associated with vehicle ownership. Most cars sit idle on the street for 95% of the time, occupying parking. 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 public health through increased activity.
What Went Wrong?
Zipcar was founded in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its parent company's total earnings, and a deficit that grew to £11.7m in 2024 gave no reason to continue.
The parent company stated the closure is part of a “broader transformation across our global operations, where we are taking deliberate steps to streamline operations, 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 continues to suppress demand for non-essential services,” it said.
The Capital's Specific Challenges
Yet, industry observers noted that London has specific problems that made it difficult for the sector to succeed.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a patchwork of varying processes and costs that complicate operations.
- Congestion Charge: The closure comes as electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: Residents in some boroughs pay as little as £63 for a annual 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 remove vehicles. We’re putting less polluting cars in their place.”
A European Example
Other European countries offer examples for London to follow. Germany enacted national car-sharing legislation in 2017, providing a nationwide framework for parking, subsidies and exemptions. 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.
“The evidence shows is that shared mobility 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 one unnamed client was looking at entering the London market: “Operators will fill this gap.”
The Future Landscape
The company’s competitors can be split into two models:
- Company-Owned Fleets: 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 – similar to Airbnb for cars. Examples Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered P2P service, is assessing 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. For now, more people may feel forced to buy cars, and others across London will be without a convenient option.
For Rotherhithe community kitchen, the coming weeks will be a scramble to find a way. The delivery problem caused by Zipcar’s exit highlights the wider implications of its departure on vital services and the future of car-sharing in the UK.
