What Exactly Has Gone So Wrong at Zipcar – Is the UK Car-Sharing Market Dead?
A volunteer food project in Rotherhithe has provided hundreds of prepared dishes weekly for the past two years to pensioners and vulnerable locals in south London. Yet, the group's plans face major disruption by the announcement that they will lose use of New Year’s Day.
This organization had relied on Zipcar, the car-sharing company that allowed its cars via smartphone. It sent shockwaves through the capital when it declared it would cease its UK operations from 1 January.
It will mean many volunteers will be unable to collect food from a major food charity, that collects surplus food from grocery stores, cafes and restaurants. Other options are less convenient, more expensive, or do not offer the same flexible hours.
“The impact will be massively,” stated Vimal Pandya, the community kitchen’s founder. “My team and I are worried about the operational hurdle we will face. A lot of people 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 part of 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. The vast majority of those people were probably with Zipcar, which had a near-monopoly position in the city.
This shutdown, subject to consultation with staff, is a serious setback to hopes that vehicle clubs in urban areas could cut the need for private vehicle ownership. However, some experts have noted that Zipcar’s departure need not spell the end for the concept in Britain.
The Potential of Car Sharing
Shared vehicle use is prized by city planners and environmentalists as a way of reducing the ills linked to vehicle ownership. Most cars sit as two-tonne dead weights on the side of the road for 95% of the time, occupying parking. They also involve large carbon emissions to produce, and people without a vehicle tend to walk, cycle and take public transport more. That benefits cities – easing congestion and pollution – and improves people’s health through more exercise.
What Went Wrong?
The company started in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its parent company's overall annual revenue, and a loss 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 global operations, where we are taking deliberate steps to streamline operations, enhance profitability”.
Zipcar’s most recent accounts said revenues had declined as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the economic squeeze, which continues to suppress demand for non-essential services,” it said.
The Capital's Specific Hurdles
However, 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 different procedures and costs that complicate operations.
- Congestion Charge: The closure coincides with electric cars becoming liable for London’s congestion charge, adding extra expenses.
- 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 per year, creating a significant barrier.
“Our fees should be one-twentieth of a resident’s permit,” argued Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”
Lessons from Abroad
Other European countries offer models for London to follow. Germany enacted national car-sharing legislation 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 growing,” said 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.”
What Comes Next?
Other players can be split into two camps:
- Company-Owned Fleets: Which own or lease 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. Examples Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered peer-to-peer platform, is already weighing up the UK gap. Rory Brimmer, its UK managing director, said there was a “big opportunity” to win more users. “There is a void that is going to need to be filled, because London still needs to move,” Brimmer said.
Yet, it could take some time for other players to establish themselves. For now, more people may choose to buy cars, and many across London will be without a convenient option.
For the volunteers in Rotherhithe, the coming weeks will be a scramble to find a solution. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on community groups and the prospects of car-sharing in the UK.