What Exactly Has Gone Wrong at Zipcar – and the UK Vehicle-Sharing Sector Dead?
A community kitchen in Rotherhithe has provided hundreds of prepared dishes weekly for two years to elderly residents and needy locals in south London. Yet, the group's plans face major disruption by the news that they will lose use of New Year’s Day.
This organization had relied on Zipcar, the car-sharing company that customers to access its fleet of vehicles from the street. It sent shockwaves through the capital when it said it would shut down its UK business from 1 January.
This means many helpers cannot pick up supplies from the Felix Project, that collects surplus food from grocery stores, cafes and restaurants. Other options are further away, more expensive, or do not offer the same flexible hours.
“The impact will be massively,” stated Vimal Pandya, the project's founder. “Personally me and my team are worried about 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 Urban Car-Sharing
These volunteers are part of 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 members were probably with Zipcar, which had a near-monopoly position in the city.
This shutdown, pending consultation with employees, is a serious setback to the vision that car sharing in cities could reduce the need for private vehicle ownership. However, some experts also suggested that Zipcar’s exit need not mean the demise for the concept in Britain.
The Potential of Car Sharing
Shared vehicle use 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 side of the road for 95% of the time, occupying parking. They also require large carbon emissions to produce, and people who do not own cars tend to walk, cycle and take public transport more. That helps urban areas – reducing congestion and pollution – and improves people’s health through increased activity.
Understanding the Decline
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 deficit that grew to £11.7m in 2024 gave little incentive to continue.
The parent company stated the closure is part of a “wider restructuring across our international business, where we are taking deliberate steps to streamline operations, enhance profitability”.
Zipcar’s most recent accounts said revenues had fallen as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the cost-of-living crisis, which continues to suppress demand for discretionary spending,” it said.
London's Unique Challenges
Yet, industry observers noted that London has particular issues that made it difficult for the company and its rivals to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a patchwork of different procedures and prices that complicate operations.
- Congestion Charge: The closure coincides with electric cars becoming liable for London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: Locals 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.
“We should literally be charged one-twentieth of a private parking cost,” said Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”
Lessons from Abroad
Nations in Europe offer examples 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 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 expanding,” commented Bharath Devanathan of Invers.
He suggested authorities should start to treat car sharing as a form of mass transit, and integrate it with train and bus stations. He added that a potential operator was looking at entering the London market: “Operators will fill this gap.”
The Future Landscape
Other players 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 rent 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 peer-to-peer platform, is already weighing up the UK gap. Rory Brimmer, its UK managing director, 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 feel forced to buy cars, and many across London will be without a convenient option.
For the volunteers in Rotherhithe, the coming weeks will be a rush to find a solution. The logistical challenge caused by Zipcar’s exit highlights the broader impact of its departure on vital services and the future of car-sharing in the UK.