What Has Gone Wrong at Zipcar – and the UK Vehicle-Sharing Sector Dead?
The volunteer food project in Rotherhithe has provided a large number of prepared dishes each week for two years to elderly residents and needy locals in south London. However, the group's plans have been thrown into disarray by the news that they will lose use of New Year’s Day.
This organization depended on Zipcar, the app-based vehicle rental service that customers to access its fleet of vehicles via smartphone. It sent shockwaves through the capital when it said it would shut down its UK business from 1 January.
It will mean many volunteers cannot pick up supplies from the Felix Project, that collects excess produce from supermarkets, cafes and restaurants. Other options are less convenient, more expensive, or do not offer the same convenient access.
“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.”
“Faced with this reality, they are all worried and thinking: ‘How are we going to carry on?”
A Significant Setback for City Vehicle Clubs
These volunteers are among over 500,000 people in London who were car club members, now potentially left without easy use to vehicles, avoiding the burden and cost of ownership. The vast majority of those members were likely with Zipcar, which held a dominant position in the city.
This shutdown, subject to consultation with employees, is a big blow to hopes that car sharing in urban areas could reduce the need for private vehicle ownership. Yet, some experts also suggested that Zipcar’s departure need not spell the end for the concept in Britain.
The Potential of Car Sharing
Car sharing is valued by city planners and green advocates as a way of mitigating the ills linked to vehicle ownership. Most cars sit as two-tonne dead weights on the side of the road for 95% of the time, using up space. They also involve large CO2 output to produce, and people without a vehicle tend to walk, cycle and take transit more. That benefits cities – easing congestion and pollution – and improves people’s health through increased activity.
Understanding the Decline
Zipcar was founded in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its parent company's overall annual revenue, and a deficit that grew to £11.7m in 2024 gave no reason to continue.
Avis Budget has said the closure is part of a “wider restructuring across our international business, where we are taking deliberate steps to streamline operations, enhance profitability”.
Zipcar’s most recent accounts said revenues had fallen as drivers took less frequent, 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
Yet, industry observers noted that London has specific problems that made it difficult for the sector to succeed.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a mosaic of varying processes and costs that complicate operations.
- Congestion Charge: The closure comes as electric cars becoming liable for London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: 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.
“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
Nations in Europe offer examples for London to follow. Germany enacted national shared mobility laws in 2017, providing a unified system for parking, subsidies 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 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 mass transit, and link it with train and bus stations. He added that a potential operator was looking at entering the London market: “There will be fill this gap.”
The Future Landscape
Other players can be split into two camps:
- Company-Owned Fleets: Which own or lease 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 head, said there was a “significant chance” 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. In the meantime, more people may feel forced to buy cars, and others across London will be without a convenient option.
For Rotherhithe community kitchen, the coming weeks will be a scramble to find a way. The logistical challenge caused by Zipcar’s exit highlights the broader impact of its departure on community groups and the prospects of shared mobility in the UK.
