What Exactly Has Gone So Awry at Zipcar – Is the UK Vehicle-Sharing Market Dead?
A community kitchen in Rotherhithe has distributed hundreds of prepared dishes weekly for two years to pensioners and needy locals in south London. Yet, their operations have been thrown into disarray by the announcement that they will lose cars and vans on New Year’s Day.
The group had relied on Zipcar, the car-sharing company that customers to access its fleet of vehicles from the street. It caused shock across London when it said it would shut down its UK operations from 1 January.
This means many volunteers cannot collect food from a major food charity, which gathers excess produce from grocery stores, 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 project's founder. “My team and I are worried about the logistical challenge we will face. Many groups like ours will face difficulties.”
“Knowing the reality, everyone is concerned and thinking: ‘How are we going to carry on?”
A Major Blow for City Vehicle Clubs
The community kitchen’s drivers are among more than half a million people in London registered as 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 likely with Zipcar, which had a near-monopoly position in the city.
This shutdown, subject to consultation with employees, is a big blow to hopes that car sharing in urban areas could cut the need for private vehicle ownership. Yet, some experts have noted that Zipcar’s departure need not spell the end for the concept in Britain.
The Potential of Car Sharing
Car sharing is valued by city planners and green advocates as a way of reducing the ills associated with vehicle ownership. Most cars sit as two-tonne dead weights on the street for the vast majority of the time, using up space. They also involve large carbon emissions to produce, and people who do not own cars tend to use active travel and take transit more. That helps urban areas – 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 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 “wider restructuring across our international business, where we are taking targeted actions to streamline operations, enhance profitability”.
Its latest financial reports said revenues had fallen as drivers took less frequent, shorter trips. “This trend reflect the ongoing impact of the economic squeeze, which is dampening demand for non-essential services,” it said.
London's Unique Hurdles
Yet, several experts noted that London has particular issues that made it much harder for the company and its rivals to succeed.
- Patchwork Policies: Across 33 boroughs, car-club operators face a patchwork of different procedures and costs that complicate operations.
- New Costs: 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 significant barrier.
“Our fees should be one-twentieth of a resident’s permit,” said Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”
A European Example
Other European countries offer examples for London to follow. Germany introduced national car-sharing legislation in 2017, providing a unified system for parking, subsidies 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 expanding,” commented Bharath Devanathan of Invers.
Devanathan said authorities should start to view vehicle clubs as a form of public transport, 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.”
What Comes Next?
The company’s competitors can be split into two models:
- Fleet Operators: Which maintain 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. Examples Britain’s Hiyacar and the US’s Getaround and Turo.
Turo, 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. “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 without a convenient option.
For the volunteers in Rotherhithe, the next month 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 prospects of shared mobility in the UK.
