What Has Gone So Awry at Zipcar – Is the UK Car-Sharing Market Dead?
A community kitchen in Rotherhithe has provided a large number of prepared dishes each week for the past two years to pensioners and needy locals in southeast London. However, their operations have been thrown into disarray by the news that they will not have cars and vans on New Year’s Day.
This organization had relied on Zipcar, the app-based vehicle rental service that customers to access its cars from the street. The company caused shock across London when it said it would cease its UK business from 1 January.
This means many volunteers will be unable to collect food from a major food charity, that collects excess produce from supermarkets, cafes and restaurants. Other options 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 concerned by the logistical challenge we will face. Many groups like ours will face difficulties.”
“Faced with this reality, they are all worried and thinking: ‘How will we continue?’”
A Major Blow for Urban Car-Sharing
The community kitchen’s drivers are part of more than half a million people in London who were car club members, now potentially left without convenient access to vehicles, without the hassle and cost of ownership. Most of those people were probably with Zipcar, which held a dominant position in the city.
The planned closure, subject to consultation with employees, is a serious setback to hopes that car sharing in cities could cut the need for private vehicle ownership. However, some experts also suggested that Zipcar’s exit need not mean the demise for the concept in Britain.
The Potential of Shared Mobility
Car sharing is valued by many urbanists and environmentalists as a way of mitigating the ills 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 carbon emissions to produce, and people who do not own cars tend to use active travel and take transit more. That helps urban areas – 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 overall annual revenue, and a loss that reached £11.7m in 2024 gave little incentive to continue.
The parent company stated the closure is part of a “broader transformation across our global operations, where we are taking targeted actions to simplify processes, enhance profitability”.
Its latest financial reports noted revenues had fallen as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the cost-of-living crisis, which continues to suppress 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.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a patchwork of varying processes and prices that complicate operations.
- New Costs: 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 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’re putting less polluting cars in their place.”
A European Example
Other European countries offer examples for London to follow. Germany enacted national shared mobility laws 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.
“The evidence shows is that shared mobility around the world, especially in Europe, is growing,” commented 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 one unnamed client was already seriously considering entering the London market: “There will be fill this gap.”
The Future Landscape
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. Players include Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered peer-to-peer platform, is assessing 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 some time for other players to build momentum. For now, more people may choose to buy cars, and many across London will be left without access.
For the volunteers in Rotherhithe, the next month will be a scramble to find a solution. The delivery problem caused by Zipcar’s exit highlights the broader impact of its departure on community groups and the future of car-sharing in the UK.
