What Has Gone Wrong at Zipcar – Is the UK Vehicle-Sharing Market Dead?
The volunteer food project in Rotherhithe has distributed hundreds of cooked meals each week for two years to elderly residents and vulnerable locals in southeast London. However, the group's plans have been thrown into disarray by the news that they will lose access to New Year’s Day.
This organization depended on Zipcar, the app-based vehicle rental service that allowed its cars via smartphone. The company sent shockwaves through the capital when it said it would shut down its UK business from 1 January.
It will mean many volunteers will be unable to pick up supplies from the Felix Project, that collects excess produce from supermarkets, cafes and restaurants. Obvious alternatives are further away, more expensive, or do not offer the same convenient access.
“The impact will be massively,” said Vimal Pandya, the community kitchen’s founder. “Personally me and my team are concerned by the operational hurdle we will face. A lot of people like ours will face difficulties.”
“Faced with this reality, they are all worried and thinking: ‘How will we continue?’”
A Major Blow 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. Most of those people were likely with Zipcar, which had a near-monopoly position in the city.
The planned closure, pending consultation with staff, is a serious setback to hopes that car sharing in cities could reduce the need for owning a car. 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 valued by city planners and green advocates as a way of mitigating the problems associated with vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the street for 95% of the time, occupying parking. They also involve large CO2 output to produce, and people who do not own cars tend to walk, cycle and take public transport more. That helps urban areas – easing congestion and pollution – and boosts public health through more exercise.
What Went Wrong?
The company started in 2000 before being bought 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 no reason 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 streamline operations, enhance profitability”.
Zipcar’s most recent accounts said revenues had fallen 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
Yet, several experts 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 patchwork of varying processes and costs that made it harder.
- Congestion Charge: The closure comes as electric cars becoming liable for London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: Residents in some boroughs pay as little as £63 for a year’s electric car parking permit. A floating car club would pay over £1,100 per year, creating a significant barrier.
“Our fees should be 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.”
A European Example
Nations in Europe offer models for London to follow. Germany enacted 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 lags behind at 0.7.
“The evidence shows is that shared mobility around the world, particularly on the continent, is growing,” said Bharath Devanathan of Invers.
Devanathan said 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 already seriously considering entering the London market: “Operators will fill this gap.”
What Comes Next?
Other players can be split into two camps:
- 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 rent 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 P2P service, is already weighing up 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.
Yet, it could take some time for other players to build momentum. 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 rush to find a solution. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on community groups and the future of shared mobility in the UK.
