What Has Gone Wrong at Zipcar – and the UK Vehicle-Sharing Sector Dead?
A community kitchen in Rotherhithe has distributed a large number of cooked meals each week for two years to pensioners and vulnerable locals in southeast London. However, their operations have been thrown into disarray 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 fleet of vehicles via smartphone. The company sent shockwaves across London when it said it would shut down its UK operations from 1 January.
This means many volunteers will be unable to pick up supplies from the Felix Project, which gathers excess produce from grocery stores, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or lack the same convenient access.
“The impact will be massively,” said Vimal Pandya, the community kitchen’s founder. “Personally me and my team are worried about the logistical challenge we will face. Many groups 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 over 500,000 people in London who were car club members, now potentially left without easy use to vehicles, without the hassle and cost of ownership. The vast majority of those members were likely with Zipcar, which had a near-monopoly position in the city.
This shutdown, pending consultation with employees, is a big blow to the vision that car sharing in urban areas could reduce the need for private vehicle ownership. However, 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 problems linked to vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the street for 95% 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 transit more. That benefits cities – easing congestion and pollution – and boosts people’s health through increased activity.
Understanding the Decline
The company started in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK income barely registered compared with its owner's overall annual revenue, and a loss that grew to £11.7m in 2024 gave little incentive to continue.
Avis Budget has said the closure is part of a “wider restructuring across our global operations, where we are taking deliberate steps to simplify processes, enhance profitability”.
Zipcar’s most recent accounts said revenues had declined as drivers took less frequent, shorter trips. “This trend reflect the ongoing impact of the cost-of-living crisis, which continues to suppress demand for discretionary spending,” it said.
London's Unique Challenges
Yet, several experts noted that London has specific problems that made it difficult for the sector to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a patchwork of different procedures and costs that made it harder.
- New Costs: The closure coincides with electric cars start paying London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: 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 significant barrier.
“We should literally be charged 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 car-sharing legislation in 2017, providing a unified system for parking, support 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, particularly on the continent, is expanding,” said Bharath Devanathan of Invers.
Devanathan said authorities should start to treat car sharing as a form of public transport, 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?
The company’s competitors can be split into two camps:
- Company-Owned Fleets: 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. Examples Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered P2P service, is assessing the UK gap. Rory Brimmer, its UK head, said there was a “significant chance” to win more users. “There is a void 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. For now, more people may feel forced to buy cars, and many across London will be left without access.
For the volunteers in Rotherhithe, the coming weeks will be a scramble to find a solution. The delivery problem caused by Zipcar’s exit highlights the wider implications of its departure on vital services and the future of car-sharing in the UK.