What Exactly Has Gone Wrong at Zipcar – Is the UK Vehicle-Sharing Sector Finished?
A volunteer food project in Rotherhithe has provided hundreds of prepared dishes each week for the past two years to pensioners and vulnerable locals in southeast London. However, their operations have been thrown into disarray by the news that they will lose use of New Year’s Day.
The group had relied 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 helpers cannot collect food from the Felix Project, that collects surplus food from grocery stores, cafes and restaurants. Other options are less convenient, more expensive, or do not offer the same convenient access.
“The impact will be massively,” stated Vimal Pandya, the community kitchen’s founder. “My team and I are concerned by the operational hurdle we will face. Many groups 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 part of more than half a million people in London registered as car club members, now potentially 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.
The planned closure, pending consultation with employees, is a big blow to hopes that car sharing in cities could cut the need for owning a car. Yet, some experts also suggested that Zipcar’s departure need not mean the demise for the idea in Britain.
The Potential of Shared Mobility
Shared vehicle use is valued by many urbanists and environmentalists as a way of mitigating 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, using up space. They also require large carbon emissions to produce, and people without a vehicle tend to walk, cycle and take public transport more. That benefits cities – reducing congestion and pollution – and boosts people’s health through increased activity.
What Went Wrong?
The company started in 2000 before being bought by the US car rental group 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 “broader transformation across our international business, where we are taking targeted actions to streamline operations, 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, industry observers noted that London has specific problems that made it difficult for the company and its rivals to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a mosaic of different procedures and prices that made it harder.
- New Costs: The closure coincides with electric cars start paying London’s congestion charge, adding unavoidable costs.
- Parking Permit Disparity: 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 major disincentive.
“We should literally be charged one-twentieth of a resident’s permit,” said Robert Schopen of Co Wheels. “We’re taking cars off the street. We’re putting less polluting cars in their place.”
Lessons from Abroad
Other European countries offer examples for London to follow. Germany enacted national car-sharing legislation in 2017, providing a unified system for parking, support 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 growing,” said 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 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 camps:
- Fleet Operators: Which own or lease their own cars. Examples 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 – similar to 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 managing director, said there was a “big opportunity” to win more users. “There is a void 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. In the meantime, more people may feel forced to buy cars, and others across London will be left without access.
For Rotherhithe community kitchen, the coming weeks will be a rush to find a solution. The logistical challenge caused by Zipcar’s exit highlights the wider implications of its departure on vital services and the future of shared mobility in the UK.