What Has Gone So Awry at Zipcar – Is the UK Vehicle-Sharing Market Finished?
A volunteer food project in Rotherhithe has distributed a large number of cooked meals weekly for the past two years to pensioners and needy locals in south London. However, the group's plans have been thrown into disarray by the announcement that they will lose cars and vans on New Year’s Day.
The group depended on Zipcar, the car-sharing company that allowed its cars via smartphone. It sent shockwaves across London when it said it would cease its UK business from 1 January.
This means many helpers will be unable to collect food from a major food charity, which gathers excess produce from supermarkets, cafes and restaurants. Obvious alternatives are further away, more expensive, or do not offer the same flexible hours.
“It’s going to be affected massively,” stated Vimal Pandya, the project's founder. “My team and I are concerned by the logistical challenge we will face. A lot of people like ours are going to struggle.”
“Faced with this reality, they are all worried and thinking: ‘How will we continue?’”
A Major Blow for City Vehicle Clubs
These volunteers are part of more than half a million people in London registered as car club members, now potentially left without convenient access to vehicles, without the hassle and cost of ownership. The vast majority of those members were probably with Zipcar, which had a near-monopoly position in the city.
The planned closure, subject to consultation with staff, is a big blow to hopes that car sharing in cities could cut the need for owning a car. However, some experts also suggested that Zipcar’s departure need not spell the end for the idea in Britain.
The Promise of Car Sharing
Car sharing is valued by city planners and green advocates as a way of mitigating the ills associated with vehicle ownership. Most cars sit idle on the side of the road for the vast majority of the time, using up space. They also involve large CO2 output to produce, and people without a vehicle tend to use active travel and take transit more. That benefits cities – reducing congestion and pollution – and boosts people’s health through more exercise.
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 owner's overall annual revenue, and a loss that reached £11.7m in 2024 gave no reason to continue.
The parent company stated the closure is part of a “wider restructuring across our international business, where we are taking targeted actions to simplify processes, enhance profitability”.
Zipcar’s most recent accounts said 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 non-essential services,” it said.
London's Unique Challenges
However, industry observers noted that London has particular issues that made it difficult for the company and its rivals to succeed.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a patchwork of different procedures and costs that complicate operations.
- New Costs: The closure coincides with electric cars start paying London’s congestion charge, adding unavoidable costs.
- Parking Permit Disparity: Locals in some boroughs pay as little as £63 for a year’s electric car parking permit. A floating car club would pay over £1,100 annually, creating a significant barrier.
“We should literally be charged one-twentieth of a private parking cost,” argued Robert Schopen of Co Wheels. “We’re taking cars off the street. We introduce cleaner models in their place.”
Lessons from Abroad
Other European countries offer examples for London to follow. Germany introduced national shared mobility laws in 2017, providing a nationwide framework 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 trails at 0.7.
“The evidence shows is that car sharing around the world, particularly on the continent, is expanding,” said Bharath Devanathan of Invers.
Devanathan said authorities should start to treat car sharing 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 roughly be divided into two camps:
- 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 hire out their own vehicles via an app – similar to Airbnb for cars. Players include Britain’s Hiyacar and the US’s Getaround and Turo.
Turo, a US-headquartered P2P service, is assessing the UK gap. Rory Brimmer, its UK head, 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.
Yet, it could take some time for other players to build momentum. 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 way. The delivery problem caused by Zipcar’s exit highlights the wider implications of its departure on vital services and the prospects of car-sharing in the UK.
