What Exactly Has Gone So Awry at Zipcar – Is the UK Vehicle-Sharing Market Dead?
The community kitchen in Rotherhithe has been delivering a large number of cooked meals weekly for the past two years to pensioners and vulnerable locals in south London. Yet, their operations have been thrown into disarray by the announcement that they will not have access to 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 across London when it declared it would shut down its UK business from 1 January.
It will mean many volunteers will be unable to pick up supplies from the Felix Project, which gathers excess produce from grocery stores, cafes and restaurants. Other options are less convenient, more expensive, or lack the same flexible hours.
“It’s going to be affected massively,” said Vimal Pandya, the project's founder. “Personally me and my team are worried about the operational hurdle we will face. Many groups like ours will face difficulties.”
“Knowing the reality, everyone is concerned and thinking: ‘How are we going to carry on?”
A Major Blow for City Vehicle Clubs
These volunteers are part of 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. The vast majority of those people were probably with Zipcar, which had a near-monopoly position in the city.
The planned closure, subject to consultation with staff, is a serious setback to hopes that vehicle clubs in cities could cut the need for owning a car. However, some experts also suggested that Zipcar’s exit need not spell the end for the idea in Britain.
The Potential of Shared Mobility
Car sharing is valued by many urbanists and environmentalists as a way of reducing the problems linked to vehicle ownership. Typically, vehicles 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 – reducing congestion and pollution – and boosts public 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 revenues were minimal compared with its parent company's total earnings, and a loss that grew to £11.7m in 2024 gave no reason to continue.
Avis Budget has said the closure is part of a “broader transformation across our global operations, where we are taking deliberate steps to simplify processes, improve returns”.
Its latest financial reports noted revenues had fallen as drivers took fewer and shorter trips. “This trend reflect the ongoing impact of the cost-of-living crisis, which continues to suppress demand for non-essential services,” it said.
The Capital's Specific Hurdles
Yet, industry observers noted that London has specific problems that made it difficult for the company and its rivals to succeed.
- Inconsistent Rules: With numerous local councils, car-club operators face a mosaic of varying processes and prices that made it harder.
- Congestion Charge: The closure coincides with electric cars start paying London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: Locals in some boroughs pay just £63 for a annual electric car parking permit. A similar shared vehicle would pay over £1,100 per year, creating a significant barrier.
“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.”
Lessons from Abroad
Nations in Europe offer models for London to follow. Germany introduced national shared mobility laws in 2017, providing a nationwide framework for parking, support 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 trails at 0.7.
“The evidence shows is that shared mobility around the world, particularly on the continent, is expanding,” said Bharath Devanathan of Invers.
He suggested 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: “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. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- 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. “A space exists that is going to need to be filled, because London still needs to move,” Brimmer said.
However, it could take some time 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 rush to find a solution. The logistical challenge caused by Zipcar’s exit underscores the wider implications of its departure on community groups and the prospects of car-sharing in the UK.
