What Has Gone Wrong at Zipcar – Is the UK Vehicle-Sharing Market Dead?
The community kitchen in Rotherhithe has been delivering a large number of cooked meals weekly for the past two years to elderly residents and needy locals in southeast London. Yet, their operations have been thrown into disarray by the news 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 operations from 1 January.
It will mean many volunteers cannot collect food from the Felix Project, which gathers excess produce from supermarkets, cafes and restaurants. Obvious alternatives are further away, costlier, or do not offer the same convenient access.
“It’s going to be affected massively,” stated Vimal Pandya, the community kitchen’s founder. “My team and I are concerned by the operational hurdle we will face. Many groups like ours are going to struggle.”
“Knowing the reality, everyone is concerned and thinking: ‘How will we continue?’”
A Significant Setback for City Vehicle Clubs
The community kitchen’s drivers are part of more than half a million people in London registered as car club members, who could be left without convenient access to vehicles, without the hassle and cost of ownership. The vast majority of those people were likely with Zipcar, which had a near-monopoly position in the city.
The planned closure, pending consultation with employees, is a serious setback to the vision that car sharing in urban areas could reduce the need for owning a car. Yet, some experts have noted that Zipcar’s exit need not spell the end for the idea in Britain.
The Promise of Shared Mobility
Shared vehicle use is valued by many urbanists and green advocates as a way of reducing the problems linked to vehicle ownership. Typically, vehicles sit idle on the side of the road for the vast majority of the time, occupying parking. They also involve large carbon emissions to produce, and people without a vehicle tend to walk, cycle and take public transport more. That benefits cities – reducing congestion and pollution – and boosts public health through increased activity.
What Went Wrong?
The company started in 2000 before its acquisition by the US car rental group Avis Budget in 2013. Zipcar’s UK income were minimal compared with its owner's total earnings, 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 “broader transformation across our international business, where we are taking targeted actions to streamline operations, improve returns”.
Zipcar’s most recent accounts noted revenues had fallen as drivers took less frequent, 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 Hurdles
Yet, several experts 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 prices that made it harder.
- Congestion Charge: The closure coincides with electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
- Parking Permit Disparity: Locals in some boroughs pay just £63 for a year’s electric car parking permit. A similar shared vehicle would pay over £1,100 annually, creating a significant barrier.
“Our fees should be one-twentieth of a private parking cost,” said Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”
Lessons from Abroad
Nations in Europe offer examples for London to follow. Germany introduced national car-sharing legislation in 2017, providing a nationwide framework 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.
“The evidence shows is that shared mobility around the world, especially in Europe, is expanding,” commented Bharath Devanathan of Invers.
He suggested authorities should start to view vehicle clubs 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 models:
- Company-Owned Fleets: Which own or lease their own cars. Examples 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. 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 managing director, 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.
Yet, it could take a while for other players to establish themselves. In the meantime, more people may feel forced to buy cars, and others across London will be left without access.
For Rotherhithe community kitchen, the next month will be a scramble to find a solution. The logistical challenge caused by Zipcar’s exit underscores the wider implications of its departure on community groups and the future of car-sharing in the UK.
