What Exactly Has Gone Awry at Zipcar – Is the UK Car-Sharing Sector Dead?
A volunteer food project in Rotherhithe has provided a large number of prepared dishes each week for two years to elderly residents and needy locals in south London. Yet, their operations face major disruption by the announcement that they will lose cars and vans on New Year’s Day.
This organization depended 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 volunteers will be unable to pick up supplies from a major food charity, which gathers excess produce from supermarkets, cafes and restaurants. Other options are less convenient, costlier, or do not offer the same flexible hours.
“The impact will be massively,” said Vimal Pandya, the community kitchen’s founder. “Personally me and my team are concerned by the logistical challenge we will face. A lot of people like ours are going to struggle.”
“Knowing the 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 who were car club members, now potentially left without convenient access to vehicles, avoiding the burden and cost of ownership. Most of those people were likely with Zipcar, which had a near-monopoly position in the city.
This shutdown, pending consultation with employees, is a serious setback to the vision that vehicle clubs in urban areas could cut the need for private vehicle ownership. However, some analysts have noted that Zipcar’s departure need not mean the demise for the concept in Britain.
The Potential of Car Sharing
Car sharing is valued by city planners and green advocates as a way of reducing the problems linked to vehicle ownership. Most cars sit idle on the side of the road for 95% of the time, occupying parking. They also involve large CO2 output to produce, and people who do not own cars tend to use active travel and take transit more. That benefits cities – reducing congestion and pollution – and improves public health through increased activity.
Understanding the Decline
Zipcar was founded in 2000 before its acquisition by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its owner's overall annual revenue, and a loss that reached £11.7m in 2024 gave no reason to continue.
The parent company stated the closure is part of a “broader transformation across our global operations, where we are taking deliberate steps to streamline operations, enhance profitability”.
Its latest financial reports noted revenues had declined as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the economic squeeze, which is dampening demand for discretionary spending,” it said.
London's Unique Challenges
However, industry observers noted that London has specific problems that made it much harder for the company and its rivals to succeed.
- Patchwork Policies: Across 33 boroughs, car-club operators face a mosaic of varying processes and prices that complicate operations.
- New Costs: The closure comes as electric cars start paying London’s congestion charge, adding unavoidable costs.
- Parking Permit Disparity: Residents in some boroughs pay as little as £63 for a annual electric car parking permit. A similar shared vehicle would pay over £1,100 per year, creating a major disincentive.
“Our fees should be one-twentieth of a resident’s permit,” argued Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”
Lessons from Abroad
Other European countries offer examples for London to follow. Germany introduced national shared mobility laws in 2017, providing a unified system for parking, subsidies and exemptions. 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 shared mobility around the world, especially in Europe, is expanding,” 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 looking at entering the London market: “Operators will fill this gap.”
The Future Landscape
The company’s competitors can roughly be divided into two camps:
- Company-Owned Fleets: Which maintain their own cars. Examples 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. Players include Britain’s Hiyacar and the US’s Getaround and Turo.
Turo, a US-headquartered P2P service, is already weighing up the UK gap. Rory Brimmer, its UK managing director, 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.
Yet, it could take some time for other players to build momentum. For now, more people may feel forced to buy cars, and many across London will be without a convenient option.
For the volunteers in Rotherhithe, the next month will be a scramble to find a way. The logistical challenge caused by Zipcar’s exit highlights the wider implications of its departure on vital services and the future of shared mobility in the UK.
