What Exactly Has Gone Awry at Zipcar – and the UK Car-Sharing Market Finished?
The volunteer food project in Rotherhithe has provided 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 not have use of New Year’s Day.
The group had relied on Zipcar, the app-based vehicle rental service that allowed its fleet of vehicles via smartphone. It caused shock through the capital when it declared it would shut down its UK business from 1 January.
It will mean many helpers will be unable to collect food from the Felix Project, which gathers excess produce from supermarkets, cafes and restaurants. Other options are less convenient, more expensive, or do not offer the same flexible hours.
“The impact will be massively,” said Vimal Pandya, the project's founder. “Personally me and my team are worried about the operational hurdle we will face. A lot of people like ours will face difficulties.”
“Knowing the reality, they are all worried and thinking: ‘How are we going to carry on?”
A Significant Setback for City Vehicle Clubs
These volunteers are part of 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 likely with Zipcar, which held a dominant position in the city.
The planned closure, subject to consultation with staff, 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 departure need not spell the end for the concept in Britain.
The Potential of Car Sharing
Car sharing is valued by many urbanists and green advocates as a way of reducing the ills associated with vehicle ownership. Most cars sit idle on the street for the vast majority of the time, occupying parking. They also involve large carbon emissions to produce, and people who do not own cars tend to walk, cycle and take public transport more. That benefits cities – easing congestion and pollution – and improves people’s health through increased activity.
What Went Wrong?
Zipcar was founded in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its parent company's overall annual revenue, and a deficit that grew to £11.7m in 2024 gave little incentive to continue.
Avis Budget has said the closure is part of a “wider restructuring across our international business, where we are taking targeted actions to simplify processes, enhance profitability”.
Zipcar’s most recent accounts said revenues had declined as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the economic squeeze, which is dampening demand for discretionary spending,” it said.
London's Unique Challenges
However, several experts noted that London has specific problems that made it difficult for the company and its rivals to succeed.
- Patchwork Policies: Across 33 boroughs, car-club operators face a mosaic of varying processes and costs that complicate operations.
- Congestion Charge: 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 similar shared vehicle would pay over £1,100 per year, creating a major disincentive.
“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.”
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, 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 lags behind at 0.7.
“What we see is that car sharing around the world, particularly on the continent, is expanding,” commented Bharath Devanathan of Invers.
Devanathan said 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?
The company’s competitors can roughly be divided into two camps:
- Fleet Operators: Which maintain their own cars. This includes 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. Examples Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered peer-to-peer platform, is already weighing up the UK gap. Rory Brimmer, its UK managing director, said there was a “big opportunity” 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 a while for other players to establish themselves. For now, 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 future of shared mobility in the UK.
