What Has Gone So Wrong at Zipcar – Is the UK Car-Sharing Market Finished?

The volunteer food project in Rotherhithe has been delivering hundreds of prepared dishes each week for two years to elderly residents and vulnerable locals in south London. Yet, their operations have been thrown into disarray by the announcement that they will not have use of New Year’s Day.

The group had relied on Zipcar, the app-based vehicle rental service that customers to access its cars via smartphone. The company sent shockwaves across London when it said it would cease its UK business from 1 January.

It will mean many volunteers will be unable to collect food from the Felix Project, that collects surplus food from supermarkets, cafes and restaurants. Obvious alternatives are further away, costlier, or lack the same convenient access.

“It’s going to be affected massively,” stated Vimal Pandya, the community kitchen’s founder. “Personally me and my team are worried about the logistical challenge we will face. A lot of people like ours are going to struggle.”

“Faced with this reality, everyone is concerned and thinking: ‘How are we going to carry on?”

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, without the hassle and cost of ownership. The vast majority of those members were probably with Zipcar, which had a near-monopoly position in the city.

This shutdown, pending consultation with employees, is a big blow to hopes that car sharing in urban areas could cut the need for private vehicle ownership. However, some analysts have noted that Zipcar’s exit need not spell the end 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 associated with vehicle ownership. Most cars sit idle on the street for 95% of the time, using up space. They also require large carbon emissions to produce, and people without a vehicle tend to walk, cycle and take public transport more. That benefits cities – easing congestion and pollution – and boosts people’s health through more exercise.

Understanding the Decline

The company started in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK income were minimal compared with its owner's total earnings, and a loss that reached £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 streamline operations, enhance profitability”.

Its latest financial reports said revenues had declined as drivers took less frequent, shorter trips. “This trend reflect the ongoing impact of the cost-of-living crisis, which is dampening demand for discretionary spending,” it said.

London's Unique Challenges

However, industry observers noted that London has particular issues 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 complicate operations.
• Congestion Charge: The closure coincides with electric cars becoming liable for 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 annually, 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 introduce cleaner models in their place.”

Lessons from Abroad

Other European countries offer examples for London to follow. Germany enacted national car-sharing legislation in 2017, providing a unified system 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 growing,” commented Bharath Devanathan of Invers.

He suggested 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 roughly be divided into two camps:

1. Fleet Operators: Which own or lease their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
2. 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.

Turo, a US-headquartered peer-to-peer platform, is assessing the UK gap. Rory Brimmer, its UK head, said there was a “significant chance” 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 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 delivery problem caused by Zipcar’s exit underscores the wider implications of its departure on community groups and the prospects of shared mobility in the UK.