What Has Gone So Awry at Zipcar – Is the UK Vehicle-Sharing Market Dead?
A community kitchen in Rotherhithe has distributed hundreds of prepared dishes weekly for the past two years to elderly residents and vulnerable locals in south London. Yet, their operations 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 customers to access its fleet of vehicles from the street. It sent shockwaves across London when it declared it would shut down its UK business from 1 January.
This means many volunteers cannot pick up supplies from a major food charity, that collects excess produce from supermarkets, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or do not offer the same convenient access.
“The impact will be massively,” stated Vimal Pandya, the project's founder. “Personally me and my team are concerned by the operational hurdle we will face. Many groups like ours will face difficulties.”
“Faced with this reality, everyone is concerned and thinking: ‘How will we continue?’”
A Major Blow for Urban Car-Sharing
These volunteers are among over 500,000 people in London who were car club members, now potentially left without easy use to vehicles, without the hassle and cost of ownership. Most of those people were likely 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 owning a car. However, some analysts have noted that Zipcar’s exit need not mean the demise for the idea in Britain.
The Promise of Car Sharing
Shared vehicle use is prized by city planners and green advocates as a way of mitigating the ills associated with vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the street for the vast majority of the time, occupying parking. They also require large CO2 output to produce, and people who do not own cars tend to walk, cycle 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 its acquisition by the US car rental group Avis Budget in 2013. Zipcar’s UK income were minimal compared with its parent company'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 “wider restructuring across our international business, where we are taking targeted actions to streamline operations, improve returns”.
Zipcar’s most recent accounts said revenues had declined as drivers took less frequent, shorter trips. “This trend reflect the continuing effect of the cost-of-living crisis, which is dampening demand for discretionary spending,” it said.
The Capital's Specific Challenges
Yet, several experts noted that London has specific problems that made it much harder for the sector to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a mosaic of varying processes and costs that made it harder.
- New Costs: The closure comes as electric cars becoming liable for 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 per year, creating a major disincentive.
“Our fees should be one-twentieth of a resident’s permit,” said Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”
Lessons from Abroad
Nations in Europe offer models for London to follow. Germany enacted national car-sharing legislation 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.
“What we see is that car sharing around the world, especially in Europe, is expanding,” commented Bharath Devanathan of Invers.
Devanathan said authorities should start to view vehicle clubs as a form of mass transit, and link it with train and bus stations. He added that one unnamed client was looking at entering the London market: “There will be fill this gap.”
The Future Landscape
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. Players include Britain’s Hiyacar and the US’s Getaround and Turo.
Turo, a US-headquartered P2P service, is already weighing up 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. For now, more people may choose to buy cars, and many across London will be left without access.
For Rotherhithe community kitchen, the coming weeks will be a rush 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 car-sharing in the UK.
