What Exactly Has Gone Wrong at Zipcar – and the UK Vehicle-Sharing Market Dead?
A volunteer food project in Rotherhithe has distributed hundreds of cooked meals weekly for two years to elderly residents and vulnerable locals in south London. However, their operations face major disruption by the announcement that they will lose use of New Year’s Day.
This organization depended on Zipcar, the car-sharing company that allowed its cars from the street. The company sent shockwaves across London when it said it would shut down its UK business from 1 January.
It will mean many volunteers will be unable to pick up supplies from the Felix Project, that collects surplus food from grocery stores, cafes and restaurants. Other options are less convenient, costlier, or do not offer the same flexible hours.
“It’s going to be affected massively,” stated 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, everyone is concerned and thinking: ‘How will we continue?’”
A Major Blow for City Vehicle Clubs
The community kitchen’s drivers are among over 500,000 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 members were probably with Zipcar, which had a near-monopoly position in the city.
This shutdown, pending consultation with employees, is a big blow to hopes that vehicle clubs in cities could cut the need for private vehicle ownership. However, some experts have noted that Zipcar’s exit need not mean the demise for the concept in Britain.
The Potential of Car Sharing
Car sharing is valued by many urbanists and environmentalists as a way of mitigating the ills linked to vehicle ownership. Typically, vehicles sit idle on the street for 95% of the time, occupying parking. They also require large CO2 output to produce, and people without a vehicle tend to use active travel and take transit more. That benefits cities – easing congestion and pollution – and boosts people’s health through increased activity.
What Went Wrong?
The company started in 2000 before being bought by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its parent company's total earnings, and a deficit that reached £11.7m in 2024 gave no reason to continue.
Avis Budget has said the closure is part of a “broader transformation across our global operations, where we are taking targeted actions to simplify processes, enhance profitability”.
Zipcar’s most recent accounts noted revenues had fallen as drivers took less frequent, shorter trips. “This trend reflect the continuing effect of the cost-of-living crisis, which is dampening demand for non-essential services,” it said.
The Capital's Specific Challenges
Yet, industry observers noted that London has particular issues that made it much harder for the sector to succeed.
- Inconsistent Rules: With numerous local councils, car-club operators face a mosaic of varying processes and costs that made it harder.
- Congestion Charge: The closure comes as electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
- Parking Permit Disparity: Locals in some boroughs pay just £63 for a year’s electric car parking permit. A similar shared vehicle would pay over £1,100 annually, creating a major disincentive.
“Our fees should be 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
Nations in Europe offer models for London to follow. Germany introduced national car-sharing legislation in 2017, providing a unified system for parking, support 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.
“What we see is that car sharing around the world, particularly on the continent, is growing,” 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 already seriously considering entering the London market: “There will be fill this gap.”
What Comes Next?
The company’s competitors can roughly be divided into two models:
- Fleet Operators: Which own or lease their own cars. Examples 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 – similar to 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 head, 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.
Yet, it could take a while for other players to build momentum. 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 next month will be a rush to find a way. The logistical challenge caused by Zipcar’s exit underscores the broader impact of its departure on vital services and the future of car-sharing in the UK.
