What Exactly Has Gone So Wrong at Zipcar – and the UK Car-Sharing Sector Dead?
The community kitchen in Rotherhithe has distributed a large number of prepared dishes weekly for two years to pensioners and needy locals in south London. Yet, 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 depended on Zipcar, the app-based vehicle rental service that allowed its fleet of vehicles from the street. The company caused shock through the capital when it declared it would cease its UK operations from 1 January.
It will mean many helpers cannot pick up supplies from a major food charity, that collects surplus food from supermarkets, cafes and restaurants. Obvious alternatives are further away, costlier, or lack the same convenient access.
“It’s going to be affected massively,” stated Vimal Pandya, the community kitchen’s founder. “Personally me and my team are worried about the operational hurdle we will face. Many groups like ours are going to struggle.”
“Faced with this reality, everyone is concerned and thinking: ‘How are we going to carry on?”
A Significant Setback for City Vehicle Clubs
These volunteers are part of 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 probably with Zipcar, which held a dominant 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. However, some experts also suggested that Zipcar’s exit need not mean the demise for the concept in Britain.
The Potential of Shared Mobility
Car sharing is prized by city planners and green advocates as a way of mitigating the ills associated with vehicle ownership. Typically, vehicles sit idle on the street for the vast majority of the time, using up space. They also involve large carbon emissions to produce, and people without a vehicle tend to walk, cycle and take transit more. That benefits cities – easing congestion and pollution – and improves people’s health through more exercise.
What Went Wrong?
The company started in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its parent company's overall annual revenue, 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 international business, where we are taking targeted actions to simplify processes, improve returns”.
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 continues to suppress demand for discretionary spending,” it said.
London's Unique Challenges
However, industry observers noted that London has particular issues that made it much harder for the sector to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a patchwork of different procedures and prices that made it harder.
- Congestion Charge: The closure comes as electric cars becoming liable for London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: Residents in some boroughs pay just £63 for a year’s electric car parking permit. A floating car club would pay over £1,100 per year, creating a significant barrier.
“Our fees should be one-twentieth of a resident’s permit,” argued Robert Schopen of Co Wheels. “We’re taking cars off the street. We’re putting less polluting cars in their place.”
A European Example
Nations in Europe offer examples for London to follow. Germany introduced national shared mobility laws in 2017, providing a nationwide framework 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.
“The evidence shows is that shared mobility around the world, especially in Europe, is growing,” commented Bharath Devanathan of Invers.
Devanathan said authorities should start to treat car sharing as a form of mass transit, and link it with train and bus stations. He added that one unnamed client was already seriously considering entering the London market: “There will be fill this gap.”
What Comes Next?
Other players can be split 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 rent out their own vehicles via an app – similar to Airbnb for cars. Examples Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered P2P service, is already weighing up 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.
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 left without access.
For Rotherhithe community kitchen, the coming weeks will be a rush to find a way. The delivery problem caused by Zipcar’s exit highlights the broader impact of its departure on vital services and the prospects of car-sharing in the UK.
