What Exactly Has Gone So Awry at Zipcar – and the UK Car-Sharing Sector Dead?
The community kitchen in Rotherhithe has distributed a large number of prepared dishes weekly for the past two years to pensioners and needy locals in south London. Yet, 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 car-sharing company that customers to access its fleet of vehicles via smartphone. The company sent shockwaves across London when it declared it would shut down its UK business from 1 January.
This means many helpers will be unable to collect food from the Felix Project, that collects excess produce from supermarkets, cafes and restaurants. Other options are further away, more expensive, or do not offer the same convenient access.
“The impact will be massively,” said Vimal Pandya, the project's founder. “My team and I are concerned by 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 part of over 500,000 people in London registered as car club members, who could be left without convenient access to vehicles, without the hassle and cost of ownership. Most of those people 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 car sharing in urban areas could cut the need for owning a car. Yet, some analysts also suggested that Zipcar’s exit need not spell the end for the idea in Britain.
The Promise of Car Sharing
Car sharing is prized by city planners and environmentalists as a way of reducing the ills associated with vehicle ownership. Most cars sit as two-tonne dead weights on the street 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 helps urban areas – easing congestion and pollution – and boosts public health through more exercise.
Understanding the Decline
Zipcar was founded in 2000 before its acquisition by the US car rental group Avis Budget in 2013. Zipcar’s UK income were minimal compared with its parent company's total earnings, and a deficit that grew to £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 streamline operations, improve returns”.
Its latest financial reports noted revenues had fallen as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the economic squeeze, which continues to suppress demand for discretionary spending,” it said.
London's Unique Hurdles
Yet, 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 patchwork of varying processes 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: 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 per year, creating a major disincentive.
“We should literally be charged one-twentieth of a resident’s permit,” argued 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 examples for London to follow. Germany introduced national car-sharing legislation in 2017, providing a nationwide framework for parking, support and waivers. 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.
“The evidence shows is that shared mobility around the world, particularly on the continent, 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 one unnamed client was already seriously considering entering the London market: “There will be fill this gap.”
What Comes Next?
Other players can roughly be divided into two models:
- Company-Owned Fleets: Which own or lease their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Person-to-Person Rentals: 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 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. “There is a void that is going to need to be filled, because London still needs to move,” Brimmer said.
However, it could take a while for other players to establish themselves. For now, more people may feel forced to buy cars, and others across London will be without a convenient option.
For the volunteers in Rotherhithe, the next month will be a rush to find a solution. The delivery problem caused by Zipcar’s exit highlights the wider implications of its departure on vital services and the prospects of shared mobility in the UK.
