What Has Gone Wrong at Zipcar – Is the UK Car-Sharing Sector Finished?
The community kitchen in Rotherhithe has provided hundreds of cooked meals each week for the past two years to elderly residents and needy locals in south London. Yet, the group's plans face major disruption by the news that they will not have use of New Year’s Day.
The group depended on Zipcar, the car-sharing company that customers to access its fleet of vehicles via smartphone. The company sent shockwaves through the capital when it declared it would shut down its UK operations from 1 January.
This means many helpers cannot collect food from the Felix Project, that collects surplus food from grocery stores, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or lack the same convenient access.
“It’s going to be affected massively,” said Vimal Pandya, the project's founder. “Personally me and my team are worried about the operational hurdle we will face. Many groups like ours will face difficulties.”
“Faced with this reality, they are all worried and thinking: ‘How will we continue?’”
A Significant Setback for City Vehicle Clubs
These volunteers are among over 500,000 people in London who were car club members, who could be left without convenient access to vehicles, avoiding the burden and cost of ownership. The vast majority of those members were likely with Zipcar, which had a near-monopoly position in the city.
The planned closure, pending consultation with staff, is a big blow to the vision that car sharing in cities could reduce the need for owning a car. However, some analysts have noted that Zipcar’s departure need not spell the end for the idea in Britain.
The Potential of Shared Mobility
Car sharing is prized by many urbanists and environmentalists as a way of reducing the problems linked to vehicle ownership. Typically, vehicles sit idle on the street for the vast majority of the time, occupying parking. They also involve large CO2 output to produce, and people without a vehicle tend to use active travel and take public transport more. That helps urban areas – easing congestion and pollution – and boosts people’s health through more exercise.
What Went Wrong?
The company started 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 overall annual revenue, and a deficit that reached £11.7m in 2024 gave little incentive to continue.
The parent company stated the closure is part of a “broader transformation across our international business, where we are taking deliberate steps to simplify processes, enhance profitability”.
Zipcar’s most recent accounts said revenues had declined as drivers took fewer and shorter trips. “This trend reflect the continuing effect of the cost-of-living crisis, which continues to suppress demand for discretionary spending,” it said.
The Capital's Specific Hurdles
Yet, industry observers noted that London has particular issues 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 different procedures and costs that complicate operations.
- 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 major disincentive.
“Our fees should be one-twentieth of a private parking cost,” said Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”
A European Example
Other European countries offer models for London to follow. Germany introduced national shared mobility laws in 2017, providing a nationwide framework 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 trails at 0.7.
“What we see is that car sharing around the world, particularly on the continent, is growing,” said Bharath Devanathan of Invers.
He suggested 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: “Operators will fill this gap.”
What Comes Next?
Other players can roughly be divided 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 P2P service, is already weighing up 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 some time for other players to establish themselves. In the meantime, more people may feel forced to buy cars, and many across London will be left without access.
For Rotherhithe community kitchen, the coming weeks will be a rush to find a way. The logistical challenge caused by Zipcar’s exit highlights the broader impact of its departure on community groups and the future of car-sharing in the UK.
