What Exactly Has Gone So Awry at Zipcar – Is the UK Car-Sharing Market Finished?
A volunteer food project in Rotherhithe has been delivering hundreds of cooked meals weekly for the past two years to elderly residents and vulnerable locals in south London. Yet, the group's plans face major disruption by the announcement that they will not have cars and vans on New Year’s Day.
This organization had relied on Zipcar, the app-based vehicle rental service that customers to access its cars via smartphone. It sent shockwaves across London when it said it would shut down its UK operations from 1 January.
It will mean many helpers will be unable to collect food from the Felix Project, which gathers excess produce from supermarkets, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or do not offer the same flexible hours.
“It’s going to be affected massively,” said Vimal Pandya, the community kitchen’s founder. “Personally me and my team are concerned by the operational hurdle we will face. A lot of people like ours will face difficulties.”
“Faced with this reality, everyone is concerned and thinking: ‘How are we going to carry on?”
A Significant Setback for City Vehicle Clubs
The community kitchen’s drivers are part of more than half a million people in London who were car club members, who could be left without easy use to vehicles, avoiding the burden and cost of ownership. Most of those people were probably with Zipcar, which held a dominant position in the city.
This shutdown, subject to consultation with staff, is a big blow to hopes that vehicle clubs in cities could reduce the need for owning a car. Yet, some analysts also suggested that Zipcar’s departure need not mean the demise for the idea in Britain.
The Potential of Shared Mobility
Car sharing is prized by city planners and environmentalists as a way of reducing the ills associated with vehicle ownership. Typically, vehicles sit idle 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 walk, cycle and take transit more. That benefits cities – reducing congestion and pollution – and boosts people’s health through increased activity.
What Went Wrong?
Zipcar was founded in 2000 before being bought by the American rental giant Avis Budget in 2013. Zipcar’s UK income barely registered compared with its parent company's total earnings, and a loss that grew to £11.7m in 2024 gave little incentive to continue.
The parent company stated the closure is part of a “broader transformation across our global operations, where we are taking targeted actions to simplify processes, improve returns”.
Its latest financial reports noted revenues had fallen as drivers took fewer and shorter trips. “This trend reflect the ongoing impact of the economic squeeze, which continues to suppress demand for non-essential services,” it said.
London's Unique Challenges
However, industry observers noted that London has particular issues that made it much harder for the company and its rivals to succeed.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a patchwork of varying processes and costs that complicate operations.
- Congestion Charge: The closure coincides with electric cars start paying London’s congestion charge, adding extra expenses.
- Unequal Parking Fees: Residents 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 major disincentive.
“We should literally be charged one-twentieth of a resident’s permit,” argued Robert Schopen of Co Wheels. “We’re taking cars off the street. We introduce cleaner models 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 5.4 shared cars per 10,000 people, while France has 2.1 and Belgium has 6.3. The UK lags behind 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 treat car sharing as a form of mass transit, 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.”
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.
- Peer-to-Peer Services: 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 peer-to-peer platform, is assessing the UK gap. Rory Brimmer, its UK head, said there was a “big opportunity” 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 Rotherhithe community kitchen, the coming weeks will be a rush to find a solution. The delivery problem caused by Zipcar’s exit highlights the broader impact of its departure on vital services and the future of car-sharing in the UK.
