What Exactly Has Gone Wrong at Zipcar – Is the UK Vehicle-Sharing Sector Dead?
The volunteer food project in Rotherhithe has distributed a large number of cooked meals 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 lose access to New Year’s Day.
The group depended on Zipcar, the car-sharing company that allowed its fleet of vehicles via smartphone. The company caused shock through the capital when it said it would cease its UK business from 1 January.
It will mean many helpers cannot collect food from a major food charity, which gathers excess produce from grocery stores, cafes and restaurants. Obvious alternatives are further away, more expensive, or do not offer the same flexible hours.
“The impact will be massively,” stated Vimal Pandya, the project's founder. “Personally me and my team are concerned by the operational hurdle 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
These volunteers are part of over 500,000 people in London who were car club members, now potentially left without convenient access to vehicles, avoiding the burden and cost of ownership. Most of those people were likely with Zipcar, which held a dominant position in the city.
The planned closure, pending consultation with staff, is a big blow to the vision that car sharing in cities could cut the need for owning a car. However, some analysts 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 green advocates as a way of mitigating the problems linked to 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 without a vehicle tend to use active travel and take public transport more. That helps urban areas – reducing 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 income barely registered compared with its owner's overall annual revenue, and a deficit 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 streamline operations, improve returns”.
Its latest financial reports noted revenues had fallen as drivers took fewer and shorter trips. “This trend reflect the ongoing impact of the cost-of-living crisis, which continues to suppress demand for discretionary spending,” it said.
The Capital's Specific Hurdles
Yet, industry observers noted that London has particular issues that made it difficult for the sector to succeed.
- Inconsistent Rules: With numerous local councils, car-club operators face a mosaic of different procedures and prices that complicate operations.
- New Costs: The closure comes as electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
- Parking Permit Disparity: Residents in some boroughs pay just £63 for a annual electric car parking permit. A similar shared vehicle would pay over £1,100 per year, creating a major disincentive.
“We should literally be charged one-twentieth of a private parking cost,” said Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”
A European Example
Other European countries offer models 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 trails at 0.7.
“The evidence shows is that car sharing around the world, particularly on the continent, is growing,” commented Bharath Devanathan of Invers.
Devanathan said authorities should start to treat car sharing as a form of mass transit, and link it with train and bus stations. He added that a potential operator was looking at entering the London market: “Operators will fill this gap.”
The Future Landscape
The company’s competitors can be split into two models:
- Fleet Operators: 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 assessing the UK gap. Rory Brimmer, its UK managing director, 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 a while for other players to establish themselves. In the meantime, more people may choose to buy cars, and others across London will be without a convenient option.
For the volunteers in Rotherhithe, the next month will be a scramble to find a solution. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on vital services and the prospects of car-sharing in the UK.
