What Exactly Has Gone So Wrong at Zipcar – Is the UK Car-Sharing Market Dead?
The volunteer food project in Rotherhithe has distributed a large number of prepared dishes weekly for the past two years to pensioners and needy locals in southeast London. Yet, their operations face major disruption by the announcement that they will lose access to New Year’s Day.
The group depended on Zipcar, the app-based vehicle rental service that allowed its cars via smartphone. It sent shockwaves through the capital when it declared it would shut down its UK business from 1 January.
It will mean many volunteers cannot pick up supplies from a major food charity, which gathers excess produce from supermarkets, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or do not offer the same flexible hours.
“It’s going to be affected massively,” stated Vimal Pandya, the project's founder. “Personally me and my team are worried about the logistical challenge we will face. A lot of people like ours will face difficulties.”
“Knowing the reality, they are all worried and thinking: ‘How will we continue?’”
A Major Blow for Urban Car-Sharing
The community kitchen’s drivers are among 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. 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 reduce the need for private vehicle ownership. However, some experts have noted that Zipcar’s exit need not spell the end for the idea in Britain.
The Potential of Shared Mobility
Shared vehicle use is prized by city planners and environmentalists as a way of mitigating the ills linked to 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 use active travel and take public transport more. That benefits cities – easing congestion and pollution – and improves public health through more exercise.
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 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.
The parent company stated the closure is part of a “wider restructuring across our global operations, where we are taking deliberate steps to simplify processes, enhance profitability”.
Its latest financial reports said 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 Challenges
Yet, industry observers noted that London has particular issues that made it difficult for the sector to succeed.
- Patchwork Policies: Across 33 boroughs, car-club operators face a mosaic of varying processes and costs that made it harder.
- Congestion Charge: The closure comes as electric cars start paying London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: Residents in some boroughs pay just £63 for a annual 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 resident’s permit,” argued Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”
A European Example
Other European countries offer examples for London to follow. Germany enacted national car-sharing legislation in 2017, providing a nationwide framework for parking, subsidies and exemptions. Now, the country has 5.4 shared cars per 10,000 people, while France has 2.1 and Belgium has 6.3. The UK lags behind at 0.7.
“The evidence shows is that car sharing around the world, particularly on the continent, is expanding,” commented Bharath Devanathan of Invers.
He suggested authorities should start to treat car sharing as a form of mass transit, and link it with train and bus stations. He added that one unnamed client was looking at entering the London market: “There will be fill this gap.”
The Future Landscape
Other players can be split into two camps:
- Fleet Operators: Which maintain 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 – a kind of Airbnb for cars. Examples Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered P2P service, is already weighing up the UK gap. Rory Brimmer, its UK head, 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.
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 left without access.
For the volunteers in Rotherhithe, the coming weeks will be a scramble to find a way. The logistical challenge caused by Zipcar’s exit underscores the wider implications of its departure on vital services and the prospects of shared mobility in the UK.
