What Has Gone So Wrong at Zipcar – and the UK Car-Sharing Sector Finished?
The volunteer food project in Rotherhithe has distributed hundreds of cooked meals weekly for two years to elderly residents and vulnerable locals in south London. However, the group's plans face major disruption by the announcement that they will lose use of New Year’s Day.
The group depended on Zipcar, the car-sharing company that customers to access its fleet of vehicles via smartphone. It caused shock through the capital when it declared it would cease its UK business from 1 January.
This means many helpers will be unable to collect food from a major food charity, that collects surplus food from supermarkets, cafes and restaurants. Other options are further away, costlier, or do not offer the same flexible hours.
“The impact will be massively,” said Vimal Pandya, the project's founder. “Personally me and my team are concerned by the logistical challenge 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 more than half a million people in London who were car club members, who could be left without convenient access to vehicles, without the hassle and cost of ownership. Most of those members were likely with Zipcar, which had a near-monopoly position in the city.
The planned closure, pending consultation with staff, is a big blow to hopes that car sharing in cities could reduce the need for owning a car. Yet, some analysts have noted that Zipcar’s departure need not mean the demise for the idea in Britain.
The Promise of Car Sharing
Shared vehicle use is valued by city planners and green advocates as a way of mitigating the problems associated with vehicle ownership. Most cars sit as two-tonne dead weights on the side of the road for the vast majority of the time, using up space. They also require large carbon emissions to produce, and people who do not own cars tend to use active travel and take public transport 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 US car rental group Avis Budget in 2013. Zipcar’s UK income were minimal compared with its owner's total earnings, 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 simplify processes, enhance profitability”.
Zipcar’s most recent accounts noted revenues had fallen as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the cost-of-living crisis, which is dampening demand for non-essential services,” 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.
- Patchwork Policies: With numerous local councils, car-club operators face a mosaic of varying processes and costs that complicate operations.
- New Costs: The closure comes as electric cars start paying London’s congestion charge, adding unavoidable costs.
- Parking Permit Disparity: Locals in some boroughs pay just £63 for a year’s electric car parking permit. A similar shared vehicle would pay over £1,100 annually, creating a major disincentive.
“We should literally be charged one-twentieth of a resident’s permit,” argued 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 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.
“What we see is that shared mobility around the world, especially in Europe, is expanding,” commented Bharath Devanathan of Invers.
He suggested authorities should start to view vehicle clubs 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 roughly be divided into two models:
- Fleet Operators: 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 – a kind of Airbnb for cars. Players include Britain’s Hiyacar and the US’s Getaround and Turo.
Turo, a US-headquartered peer-to-peer platform, 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 build momentum. In the meantime, more people may feel forced to buy cars, and many across London will be without a convenient option.
For Rotherhithe community kitchen, the next month will be a rush to find a way. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on community groups and the prospects of shared mobility in the UK.
