What Has Gone Wrong at Zipcar – and the UK Car-Sharing Market Dead?
A community kitchen in Rotherhithe has distributed a large number of cooked meals each week for two years to pensioners and needy locals in south London. However, the group's plans face major disruption by the announcement that they will lose cars and vans on New Year’s Day.
The group had relied on Zipcar, the app-based vehicle rental service that customers to access its fleet of vehicles via smartphone. The company caused shock through the capital when it said it would shut down its UK operations from 1 January.
It will mean many volunteers cannot collect food from the Felix Project, that collects surplus food from grocery stores, cafes and restaurants. Obvious alternatives are further away, costlier, or do not offer the same flexible hours.
“The impact will be massively,” said Vimal Pandya, the project's founder. “My team and I are concerned by the logistical challenge we will face. Many groups like ours are going to struggle.”
“Faced with this reality, they are all worried and thinking: ‘How will we continue?’”
A Major Blow for Urban Car-Sharing
These volunteers are part of over 500,000 people in London registered as car club members, who could be left without easy use to vehicles, avoiding the burden and cost of ownership. The vast majority of those people were probably with Zipcar, which had a near-monopoly position in the city.
The planned closure, pending consultation with employees, is a big blow to the vision that car sharing in urban areas could cut the need for private vehicle ownership. However, some experts also suggested that Zipcar’s exit need not mean the demise for the idea in Britain.
The Promise of Shared Mobility
Shared vehicle use is prized by city planners and environmentalists as a way of mitigating the problems linked to vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the side of the road for 95% of the time, using up space. They also require large CO2 output to produce, and people without a vehicle tend to walk, cycle and take transit more. That benefits cities – easing congestion and pollution – and improves people’s health through increased activity.
What Went Wrong?
Zipcar was founded in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK income barely registered compared with its parent company's overall annual revenue, and a loss that reached £11.7m in 2024 gave little incentive to continue.
The parent company stated the closure is part of a “wider restructuring across our global operations, where we are taking targeted actions to simplify processes, improve returns”.
Its latest financial reports said revenues had fallen as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the cost-of-living crisis, which continues to suppress demand for non-essential services,” it said.
London's Unique Challenges
However, several experts noted that London has specific problems that made it much harder for the company and its rivals to succeed.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a mosaic of varying processes and prices that complicate operations.
- Congestion Charge: The closure comes as electric cars becoming liable for London’s congestion charge, adding extra expenses.
- Unequal Parking Fees: Locals in some boroughs pay as little as £63 for a annual electric car parking permit. A floating car club would pay over £1,100 annually, creating a significant barrier.
“Our fees should be one-twentieth of a resident’s permit,” said Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars 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 trails 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 public transport, and integrate it with train and bus stations. He added that a potential operator was looking at entering the London market: “Operators will fill this gap.”
What Comes Next?
Other players can roughly be divided into two models:
- Fleet Operators: Which own or lease their own cars. Examples Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Peer-to-Peer Services: 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.
Turo, a US-headquartered peer-to-peer platform, 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 a while for other players to build momentum. In the meantime, more people may choose to buy cars, and others 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 broader impact of its departure on vital services and the prospects of car-sharing in the UK.
