What Has Gone Wrong at Zipcar – and the UK Vehicle-Sharing Market Finished?
The community kitchen in Rotherhithe has provided hundreds of prepared dishes each week for two years to elderly residents and needy locals in southeast London. However, their operations have been thrown into disarray by the news that they will lose access to New Year’s Day.
This organization had relied on Zipcar, the app-based vehicle rental service that allowed its fleet of vehicles via smartphone. It sent shockwaves through the capital when it declared it would shut down its UK business from 1 January.
This means many volunteers cannot pick up supplies from a major food charity, which gathers excess produce from grocery stores, cafes and restaurants. Obvious alternatives are further away, costlier, or do not offer the same convenient access.
“It’s going to be affected massively,” said 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.”
“Knowing the reality, they are all worried and thinking: ‘How are we going to carry on?”
A Major Blow for Urban Car-Sharing
These volunteers are part of over 500,000 people in London who were car club members, now potentially left without convenient access to vehicles, without the hassle and cost of ownership. The vast majority of those people were probably with Zipcar, which had a near-monopoly position in the city.
The planned closure, subject to consultation with employees, is a serious setback to hopes that car sharing in urban areas could cut the need for owning a car. Yet, some experts also suggested that Zipcar’s exit need not mean the demise for the concept in Britain.
The Promise of Shared Mobility
Shared vehicle use is prized by many urbanists and environmentalists as a way of reducing the ills linked to vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the side of the road for the vast majority of the time, using up space. They also involve 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 more exercise.
Understanding the Decline
The company started in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK income barely registered compared with its owner's overall annual revenue, and a deficit that grew to £11.7m in 2024 gave little incentive to continue.
The parent company stated the closure is part of a “wider restructuring across our global operations, where we are taking targeted actions to simplify processes, improve returns”.
Its latest financial reports said revenues had declined as drivers took fewer and shorter trips. “This trend reflect the continuing effect of the cost-of-living crisis, which is dampening demand for discretionary spending,” it said.
London's Unique Challenges
However, several experts 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 patchwork of varying processes and costs that made it harder.
- Congestion Charge: The closure coincides with electric cars start paying London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: Locals in some boroughs pay just £63 for a annual 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 private parking cost,” 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
Other European countries offer models for London to follow. Germany enacted national shared mobility laws 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,” said Bharath Devanathan of Invers.
Devanathan said 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 already seriously considering entering the London market: “Operators will fill this gap.”
What Comes Next?
The company’s competitors can be split into two camps:
- Fleet Operators: Which maintain 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. Examples Britain’s Hiyacar and the US’s Getaround and Turo.
Turo, a US-headquartered peer-to-peer platform, is assessing the UK gap. Rory Brimmer, its UK head, 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.
However, it could take a while for other players to establish themselves. For now, more people may choose to buy cars, and many across London will be without a convenient option.
For the volunteers in Rotherhithe, the coming weeks will be a scramble to find a way. The delivery problem caused by Zipcar’s exit highlights the broader impact of its departure on community groups and the prospects of car-sharing in the UK.
