What Exactly Has Gone So Awry at Zipcar – and the UK Car-Sharing Market Dead?
The community kitchen in Rotherhithe has distributed hundreds of cooked meals weekly for two years to elderly residents and needy locals in south London. However, the group's plans face major disruption by the announcement that they will not have access to New Year’s Day.
This organization depended on Zipcar, the car-sharing company that customers to access its cars via smartphone. The company caused shock across London when it said it would shut down its UK operations from 1 January.
This means many helpers cannot pick up supplies from a major food charity, that collects surplus food from grocery stores, cafes and restaurants. Other options are further away, 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. A lot of people like ours will face difficulties.”
“Knowing the reality, they are all worried 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 registered as car club members, now potentially left without convenient access to vehicles, avoiding the burden and cost of ownership. The vast majority of those people were likely with Zipcar, which had a near-monopoly position in the city.
This shutdown, pending consultation with staff, is a serious setback to the vision that car sharing in cities could reduce the need for private vehicle ownership. However, some analysts also suggested that Zipcar’s departure need not spell the end for the concept in Britain.
The Promise of Shared Mobility
Car sharing is valued by many urbanists and environmentalists as a way of mitigating the problems associated with vehicle ownership. Most cars sit as two-tonne dead weights on the street 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 walk, cycle and take transit more. That helps urban areas – easing congestion and pollution – and improves people’s health through increased activity.
What Went Wrong?
Zipcar was founded in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK income barely registered compared with its parent company's total earnings, and a deficit that reached £11.7m in 2024 gave little incentive to continue.
Avis Budget has said the closure is part of a “wider restructuring across our global operations, where we are taking targeted actions to streamline operations, improve returns”.
Its latest financial reports said revenues had fallen as drivers took less frequent, shorter trips. “These changes reflect the ongoing impact of the cost-of-living crisis, which continues to suppress demand for discretionary spending,” it said.
The Capital's Specific Hurdles
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 prices that made it harder.
- New Costs: The closure coincides with electric cars becoming liable for London’s congestion charge, adding extra expenses.
- Unequal Parking Fees: Residents in some boroughs pay just £63 for a annual electric car parking permit. A floating car club would pay over £1,100 annually, creating a significant barrier.
“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
Other European countries offer examples for London to follow. Germany introduced national shared mobility laws in 2017, providing a unified system for parking, subsidies and exemptions. 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.
“The evidence shows is that car sharing around the world, especially in Europe, is expanding,” commented Bharath Devanathan of Invers.
Devanathan said authorities should start to treat car sharing 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.”
What Comes Next?
Other players can roughly be divided into two camps:
- Company-Owned Fleets: Which maintain their own cars. Examples Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Peer-to-Peer Services: Which allow users to hire 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.
One company, a US-headquartered P2P service, is already weighing up 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 some time for other players to build momentum. In the meantime, more people may feel forced to buy cars, and others across London will be left without access.
For the volunteers in Rotherhithe, 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.
