What Has Gone Awry at Zipcar – and the UK Car-Sharing Sector Finished?
A volunteer food project in Rotherhithe has distributed a large number of prepared dishes weekly for two years to pensioners and vulnerable locals in south London. Yet, their operations have been thrown into disarray by the announcement 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 cars via smartphone. The company caused shock through the capital when it declared it would shut down its UK business from 1 January.
It will mean many helpers cannot collect food from a major food charity, which gathers surplus food from supermarkets, cafes and restaurants. Obvious alternatives are less convenient, costlier, or lack the same flexible hours.
“The impact will be massively,” said Vimal Pandya, the community kitchen’s founder. “My team and I are worried about the logistical challenge 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 Urban Car-Sharing
These volunteers are part of more than half a million people in London who were car club members, now potentially left without easy use to vehicles, avoiding the burden 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 staff, is a big blow to the vision that vehicle clubs in cities could reduce the need for private vehicle ownership. However, some analysts have noted that Zipcar’s exit need not spell the end for the concept in Britain.
The Promise of Shared Mobility
Shared vehicle use is prized by city planners and environmentalists as a way of mitigating the ills linked to vehicle ownership. Typically, vehicles sit idle on the side of the road for the vast majority of the time, using up space. They also require large carbon emissions to produce, and people who do not own cars tend to use active travel and take public transport more. That benefits cities – reducing congestion and pollution – and improves public 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 owner's overall annual revenue, and a deficit that reached £11.7m in 2024 gave little incentive to continue.
Avis Budget has said the closure is part of a “broader transformation across our global operations, where we are taking deliberate steps to simplify processes, enhance profitability”.
Its latest financial reports noted revenues had fallen as drivers took fewer and shorter trips. “These changes reflect the continuing effect of the economic squeeze, which continues to suppress demand for non-essential services,” it said.
London's Unique Challenges
Yet, several experts noted that London has particular issues that made it much harder for the company and its rivals to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a mosaic of varying processes and costs that made it harder.
- Congestion Charge: The closure comes as electric cars start paying London’s congestion charge, adding unavoidable costs.
- Parking Permit Disparity: Locals 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 major disincentive.
“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
Other European countries offer models for London to follow. Germany enacted national shared mobility laws in 2017, providing a unified system for parking, subsidies and exemptions. 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, especially in Europe, is expanding,” said Bharath Devanathan of Invers.
Devanathan said authorities should start to view vehicle clubs as a form of mass transit, and link it with train and bus stations. He added that one unnamed client was looking at entering the London market: “Operators will fill this gap.”
What Comes Next?
The company’s competitors can roughly be divided into two models:
- Company-Owned Fleets: 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 rent out their own vehicles via an app – a kind of 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 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.
However, it could take some time for other players to build momentum. In the meantime, more people may choose to buy cars, and many across London will be left without access.
For the volunteers in Rotherhithe, the next month will be a rush to find a solution. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on community groups and the future of shared mobility in the UK.
