What Exactly Has Gone Wrong at Zipcar – Is the UK Car-Sharing Market Dead?
A volunteer food project in Rotherhithe has distributed a large number of prepared dishes each week for two years to elderly residents and needy locals in south London. However, their operations have been thrown into disarray by the news that they will lose use of New Year’s Day.
The group had relied on Zipcar, the car-sharing company that customers to access its cars via smartphone. It sent shockwaves across London when it declared it would shut down its UK operations from 1 January.
This means many volunteers will be unable to collect food from a major food charity, that collects excess produce from grocery stores, cafes and restaurants. Other options are further away, costlier, or do not offer the same convenient access.
“The impact will be massively,” stated Vimal Pandya, the community kitchen’s founder. “Personally me and my team are worried about the logistical challenge we will face. Many groups like ours will face difficulties.”
“Faced with this reality, they are all worried and thinking: ‘How are we going to carry on?”
A Significant Setback for City Vehicle Clubs
The community kitchen’s drivers are among more than half a million people in London who were car club members, now potentially left without convenient access to vehicles, avoiding the burden and cost of ownership. The vast majority of those people were likely with Zipcar, which held a dominant position in the city.
This shutdown, subject to consultation with employees, is a serious setback to the vision that vehicle clubs in cities could reduce the need for private vehicle ownership. Yet, some analysts also suggested that Zipcar’s departure need not mean the demise for the concept in Britain.
The Promise 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 as two-tonne dead weights on the street for 95% of the time, using up space. They also involve large carbon emissions to produce, and people without a vehicle tend to walk, cycle and take transit more. That benefits cities – easing congestion and pollution – and boosts 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 revenues were minimal compared with its owner's overall annual revenue, and a deficit that grew to £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, 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 economic squeeze, which is dampening demand for discretionary spending,” it said.
The Capital's Specific Challenges
However, industry observers noted that London has particular issues that made it much harder for the company and its rivals to succeed.
- Patchwork Policies: Across 33 boroughs, car-club operators face a patchwork of varying processes and costs that made it harder.
- New Costs: The closure coincides with electric cars start paying London’s congestion charge, adding extra expenses.
- Unequal Parking Fees: Residents in some boroughs pay just £63 for a year’s electric car parking permit. A floating car club would pay over £1,100 annually, creating a major disincentive.
“We should literally be charged one-twentieth of a private parking cost,” argued Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”
Lessons from Abroad
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, especially in Europe, is growing,” said Bharath Devanathan of Invers.
He suggested authorities should start to view vehicle clubs as a form of mass transit, and integrate it with train and bus stations. He added that a potential operator was already seriously considering entering the London market: “There will be fill this gap.”
What Comes Next?
Other players 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 P2P service, is already weighing up the UK gap. Rory Brimmer, its UK head, 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.
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 left without access.
For the volunteers in Rotherhithe, the next month will be a scramble to find a solution. The logistical challenge caused by Zipcar’s exit underscores the wider implications of its departure on vital services and the future of car-sharing in the UK.
