What Exactly Has Gone So Wrong at Zipcar – Is the UK Car-Sharing Market Dead?
A community kitchen in Rotherhithe has provided a large number of prepared dishes weekly for two years to elderly residents and vulnerable locals in south London. However, the group's plans face major disruption by the news that they will not have cars and vans on New Year’s Day.
The group had relied on Zipcar, the app-based vehicle rental service that customers to access its cars from the street. It caused shock across London when it declared it would shut down its UK business from 1 January.
It will mean many helpers 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.
“It’s going to be affected massively,” said Vimal Pandya, the project's founder. “My team and I are concerned by the operational hurdle we will face. A lot of people like ours will face difficulties.”
“Knowing the reality, they are all worried and thinking: ‘How will we continue?’”
A Significant Setback for City Vehicle Clubs
The community kitchen’s drivers are part of over 500,000 people in London registered as car club members, who could be left without convenient access 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.
The planned closure, subject to consultation with staff, is a big blow to the vision that vehicle clubs in cities could reduce the need for owning a car. Yet, some experts also suggested that Zipcar’s exit need not spell the end for the idea in Britain.
The Potential of Car Sharing
Shared vehicle use is prized by city planners and environmentalists 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, using up space. They also require large CO2 output to produce, and people who do not own cars tend to use active travel and take transit more. That benefits cities – reducing congestion and pollution – and boosts public health through more exercise.
What Went Wrong?
Zipcar was founded in 2000 before being bought by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its owner'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 “wider restructuring across our international business, where we are taking targeted actions to simplify processes, enhance profitability”.
Its latest financial reports said revenues had declined as drivers took less frequent, shorter trips. “These changes reflect the ongoing impact of the cost-of-living crisis, which continues to suppress demand for non-essential services,” 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 varying processes and prices 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 just £63 for a year’s 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’re taking cars off the street. We introduce cleaner models in their place.”
Lessons from Abroad
Nations in Europe offer models for London to follow. Germany enacted national car-sharing legislation in 2017, providing a unified system for parking, subsidies and waivers. 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.
“What we see is that car sharing around the world, particularly on the continent, is growing,” said Bharath Devanathan of Invers.
Devanathan said authorities should start to view vehicle clubs as a form of public transport, and link it with train and bus stations. He added that a potential operator was looking at entering the London market: “There will be fill this gap.”
The Future Landscape
Other players can roughly be divided into two camps:
- Fleet Operators: Which own or lease 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 – similar to Airbnb for cars. Players include 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 managing director, 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 some time 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 the volunteers in Rotherhithe, the next month will be a rush to find a solution. The delivery problem caused by Zipcar’s exit highlights the broader impact of its departure on community groups and the prospects of shared mobility in the UK.
