What Has Gone Wrong at Zipcar – Is the UK Car-Sharing Sector Dead?
The community kitchen in Rotherhithe has provided hundreds of cooked meals weekly for the past two years to pensioners and needy locals in south London. Yet, the group's plans have been thrown into disarray by the announcement that they will not have cars and vans on New Year’s Day.
This organization depended on Zipcar, the app-based vehicle rental service that customers to access its cars via smartphone. It sent shockwaves across London when it said it would shut down its UK business from 1 January.
It will mean many helpers cannot pick up supplies from the Felix Project, that collects surplus food from supermarkets, cafes and restaurants. Obvious alternatives are further away, costlier, or lack the same flexible hours.
“It’s going to be affected 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.”
“Knowing the reality, they are all worried and thinking: ‘How will we continue?’”
A Significant Setback for Urban Car-Sharing
The community kitchen’s drivers are among more than half a million people in London registered as car club members, now potentially left without easy use to vehicles, avoiding the burden and cost of ownership. The vast majority of those people were probably with Zipcar, which had a near-monopoly position in the city.
The planned closure, subject to consultation with employees, is a big blow to the vision that car sharing in cities could cut the need for private vehicle ownership. Yet, some experts also suggested that Zipcar’s exit need not spell the end for the concept in Britain.
The Potential of Shared Mobility
Shared vehicle use is prized by city planners and green advocates as a way of mitigating the ills associated with vehicle ownership. Most cars sit idle 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 – reducing congestion and pollution – and improves public health through increased activity.
Understanding the Decline
The company started in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its parent company's overall annual revenue, and a loss 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 simplify processes, enhance profitability”.
Its latest financial reports said revenues had fallen as drivers took less frequent, shorter trips. “These changes reflect the ongoing impact of the economic squeeze, which continues to suppress demand for discretionary spending,” it said.
London's Unique Hurdles
Yet, industry observers noted that London has specific problems that made it much harder for the company and its rivals to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a mosaic 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 unavoidable costs.
- Parking Permit Disparity: Residents in some boroughs pay as little as £63 for a annual electric car parking permit. A floating car club 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’re taking cars off the street. We’re putting less polluting cars in their place.”
A European Example
Other European countries offer models for London to follow. Germany introduced national shared mobility laws in 2017, providing a unified system for parking, subsidies and exemptions. Now, the country has 5.4 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 shared mobility around the world, especially in Europe, is growing,” commented Bharath Devanathan of Invers.
He suggested 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 looking at entering the London market: “Operators will fill this gap.”
What Comes Next?
Other players can be split into two camps:
- Company-Owned Fleets: Which maintain 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 – a kind of Airbnb for cars. Examples 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 “significant chance” to win more users. “A space exists 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 feel forced to buy cars, and many across London will be without a convenient option.
For Rotherhithe community kitchen, the coming weeks will be a scramble to find a solution. The delivery problem caused by Zipcar’s exit highlights the wider implications of its departure on community groups and the prospects of car-sharing in the UK.
