What Exactly Has Gone Awry at Zipcar – Is the UK Car-Sharing Sector Dead?

A volunteer food project in Rotherhithe has been delivering a large number of cooked meals weekly for two years to pensioners and needy locals in southeast London. Yet, their operations have been thrown into disarray by the news that they will lose access to New Year’s Day.

This organization had relied on Zipcar, the app-based vehicle rental service that customers to access its fleet of vehicles from the street. The company sent shockwaves through the capital when it said it would cease its UK operations from 1 January.

It will mean many volunteers will be unable to collect food from the Felix Project, that collects excess produce from supermarkets, cafes and restaurants. Other options are further away, more expensive, or do not offer the same convenient access.

“The impact will be massively,” said Vimal Pandya, the project's founder. “My team and I are worried about the operational hurdle we will face. Many groups like ours are going to struggle.”

“Knowing the reality, they are all worried and thinking: ‘How will we continue?’”

A Significant Setback for Urban Car-Sharing

These volunteers are among over 500,000 people in London who were car club members, who could be left without easy use to vehicles, avoiding the burden and cost of ownership. Most of those members were probably with Zipcar, which had a near-monopoly position in the city.

This shutdown, pending consultation with employees, is a serious setback to hopes that vehicle clubs in urban areas could reduce the need for private vehicle ownership. Yet, some experts have noted that Zipcar’s departure need not spell the end for the concept in Britain.

The Potential of Shared Mobility

Car sharing is valued by city planners and green advocates as a way of reducing the problems associated with vehicle ownership. Typically, vehicles sit idle on the street for the vast majority of the time, using up space. They also require 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 boosts public health through increased activity.

Understanding the Decline

The company started in 2000 before being bought by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its parent company's total earnings, and a deficit that reached £11.7m in 2024 gave little incentive to continue.

The parent company stated the closure is part of a “broader transformation across our international business, where we are taking deliberate steps to simplify processes, enhance profitability”.

Zipcar’s most recent accounts said revenues had declined as drivers took fewer and shorter trips. “These changes reflect the continuing effect of the economic squeeze, which continues to suppress demand for non-essential services,” it said.

The Capital's Specific Challenges

However, industry observers noted that London has specific problems that made it much harder for the sector 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 becoming liable for London’s congestion charge, adding extra expenses.
• Parking Permit Disparity: Locals in some boroughs pay as little as £63 for a annual 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 private parking cost,” said Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”

A European Example

Other European countries 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 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.

“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 view vehicle clubs as a form of public transport, and integrate 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:

1. Company-Owned Fleets: Which own or lease their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
2. Peer-to-Peer Services: 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 P2P service, 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.

However, it could take a while for other players to build momentum. In the meantime, more people may choose to buy cars, and others across London will be without a convenient option.

For Rotherhithe community kitchen, the next month will be a scramble to find a way. The logistical challenge caused by Zipcar’s exit underscores the wider implications of its departure on community groups and the future of shared mobility in the UK.